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Insight Magazine
1. insight
Inside
• COP 17 outcomes
• New fuels, new engines
and new designs
• Engineering the Olympics
• ISO 9001 evolution
• Focus on Brazil
• Hong Kong MTR
The Lloyd’s Register Group magazine Issue 4 March 2012 asset management
Arctic challenge:
maintaining the balance
3. Insight March 2012 1
Welcome
To our latest issue of Insight.
Richard Sadler, Chief Executive
Once again I am proud to introduce our latest edition of Insight, develop innovative environmental projects and businesses. We
a title that is becoming increasingly respected among politicians, update our readers on the latest developments from COP 17 and
industrialists and business leaders for its coverage of global issues. the climate change agenda. We look at the continuing evolution
of the international quality standard, ISO 9001. The challenge of
This edition covers a wide range of subjects that focus
engineering the Olympics and creating a transport system to cope
on the critical infrastructure that society relies on to sustain life,
with its demands is examined. We also chart the rapid growth
and quality of life. It has contributions from people with a unique
and transformation of Brazil and China’s leisure ship market.
view and huge depth of expertise in the issues that will be the
From food safety to future fuels – we examine the issues that
measure of our collective success in meeting these challenges.
affect our daily lives.
We look at the challenge of protecting our Arctic and Antarctic
The solutions to these challenges require teamwork from
regions, examining the balance between developing the Arctic’s
everybody involved – transcending geographical and political
resources and trade routes and protecting our planet’s last great
borders – because, as always, teams make better decisions.
wilderness for future generations. Koji Sekimizu, Secretary-General
of the International Maritime Organization discusses his priorities We need to be well informed for the best collective outcome.
for the protection and regulation of seaborne trade. E-idea is We hope that Insight will help you be better informed and
profiled, a new initiative to help young eco-entrepreneurs to make better decisions.
4. 2 March 2012 Insight
The
Arctic
challenge
Can we develop the region’s resources
and maintain the environmental balance?
The Arctic
• orth of the Arctic Circle (66° 33’N). Region includes
N
the Arctic Ocean and parts of Canada, Russia, Greenland,
USA, Norway, Sweden, Finland and Iceland.
• rctic Ocean has a 45,000-kilometre shoreline with
A
a 14,000-kilometre2 surface; 1.5 x area of USA.
• he Arctic states – members of the Arctic Council –
T
are Canada, Denmark (including Greenland and the Faroe
Islands), Finland, Iceland, Norway, Russian Federation,
Sweden and the USA.
5. Insight March 2012 3
Recognising the potential for increased
marine activity, the Arctic Council called
for an examination of the issues and in
2009 approved the Arctic Marine Shipping
Assessment (AMSA) 2009 Report including
The Arctic is opening up. its recommendations on enhancing marine
With Arctic sea ice reducing safety, protecting Arctic people and the
by about 10% per decade environment, and building an Arctic
marine infrastructure.
and high commodity prices
making the vast hydrocarbon The region’s extreme and unique
environmental and operational challenges
reserves more economically had put the exploitation of the hydrocarbon
attractive, global interest in reserves, estimated at 22% of the world’s
this region is growing. recoverable reserves, beyond viable reach.
But high commodity prices and growing
It is a unique area and the indigenous
global demand mean that energy exploration
peoples, flora and fauna have adapted
and production is moving further north
to its cold and extreme conditions.
into these harsh and challenging conditions.
As demands on the region increase, the
ModuSpec, a leading provider of technical
need for co-operation and negotiation
services to the offshore drilling sector, talks
will grow. But who looks after the Arctic?
about operating safely and effectively in
On page 10 Professor Klaus Dodds talks the Arctic on page 8.
about the geopolitics of the region and
The Arctic is especially vulnerable to the
argues that the Arctic Council will have
effects of global warming and concerns
a key role to play in developments.
are mounting about the increasing levels
The Arctic Council, set up in 1996, is a of mercury and other pollutant fallout
high-level intergovernmental forum to in the region. The Arctic Council urged all
promote co-operation, co-ordination and countries at COP 17 to take decisive action
interaction among the eight Arctic states, to hold the increase in global average
involving the indigenous communities and temperature below 2C above pre-industrial
other Arctic inhabitants on common issues, levels. We look at some of the outcomes
in particular sustainable development and of COP 17 on pages 22 to 28.
environmental protection in the Arctic.
And what about the Antarctic? Polar
The increasing economic activity and explorer and environmental leader Robert
retreating sea ice has encouraged interest Swan is focusing his attention on saving
in the Arctic seaways, most notably the the world’s last great wilderness as we
Northern Sea Route, as examined on page 4. report on page 12.
6. 4 March 2012 Insight
Arctic transit:
Northern Sea Route
The potential for commercial shipping
The appeal of a regular trade route from Europe to Asia crossing the
Arctic Ocean has been recognised since the fifteenth century. But it is only
in the past few decades that this tantalising prospect has become realistic.
T
he last two years have seen moves to explore the In 2009, with near record low levels of sea ice in the Arctic, two
potential of the Northern Sea Route (NSR) as a German vessels were the first foreign flagged ships to sail the NSR
summer season trade lane to and from the booming from east to west. The voyage sparked renewed international
Asia markets. Russia’s NSR is a set of sea routes from interest in the route.
the Kara Gate to the Bering Strait. The NSR is navigable along its
In 2010, Russian nuclear-powered icebreakers enabled four transit
entire length during the summer and early autumn, depending on
voyages, moving 111,000 tonnes of goods to the Asia-Pacific
the ice conditions. As the sailing distance from a north European
region. And 2011 saw a huge rise in transit traffic. Some 34 vessels
port to the Far East using the NSR is approximately 40% shorter
and 820,000 tonnes of cargo travelled the route as the further
than using the Suez Canal, it is no surprise that the commercial
retreat of sea ice doubled the summer transit period to a record
potential for this route is in the spotlight.
20 weeks, compared to 2009.
Open to foreign shipping
Demonstrating the advantages
During the Soviet Union era the NSR was a very important national
“Various shipping and charter companies are pushing the
waterway and powerful icebreakers were built to assist merchant
boundaries on the NSR to achieve faster transit times with larger
ships to reach the various ports in the region. The Russian
vessels, demonstrating the potential of using the route,” says Boris
government opened the route to foreign vessels in 1991
Ozerov, Lloyd’s Register’s Russia Marine Manager. “One driver is
and the first non-Russian flagged vessel used it that summer.
the future development of Russia’s Arctic hydrocarbon resources
However, after 1993, volumes of domestic and transit traffic that will need transport to global markets.”
plummeted, partly because government subsidies dried up.
In 2010, the Norwegian company Tschudi Shipping and Denmark’s
By 1998, transit traffic had stopped altogether. It was not
Nordic Bulk Carriers transported 41,000 tonnes of iron ore
commercially viable under the economic and climatic conditions
concentrate from northern Norway to China on the MV Nordic
of the time according to a joint Russian-Norwegian-Japanese
Barents. Based on this, Tschudi Arctic Transit publicised possible
research report (INSROP) in 1999.
savings of 20.5 days to Yokohama, Japan and 16 days to Shanghai,
7. Insight March 2012 5
MV Nordic Barents and icebreaker, 50 Years of Victory, in 2010.
China using the NSR compared to the Suez Canal, for a vessel doubt in our minds that the opening of the NSR has great
sailing from Kirkenes in Norway or the Russian port of Murmansk. commercial potential for both cargo and shipowners.”
“The 2011 transit season began unusually early,” says Desmond Cost benefit calculation
Upcraft, Ice Cold Operations Manager, Lloyd’s Register. “In late A lot has changed since the INSROP study in the 1990s. Reductions
June Russia’s largest independent gas producer, Novatek, chartered in voyage times and some dues – let alone in greenhouse gas
the ice-classed panamax tanker Perseverance to carry 60,000 emissions – have shifted the economics of the NSR, though the
tonnes of gas condensate from northwest Russia to China. equation is still finely balanced.
Conditions allowed the tanker to sail north
“You will need a transit permit,” says
of the New Siberian Islands. This route is
Upcraft, “and pay qualified ice pilots,
deeper which allows larger ships to use the “This historic sea route additional insurance premiums and Russian
NSR. Two months later, using this deeper
northern route, Sovcomflot’s suezmax has got it all; it is safer, icebreaker fees. Some of these direct costs
could be offset, as if the voyage was via the
tanker Vladimir Tikhonov became the shorter and thereby Suez Canal, there would be canal transit
largest vessel to complete the NSR, taking
120,000 tonnes of gas condensate from more eco-friendly” fees, piracy insurance and possibly the
cost of installing anti-piracy equipment.”
northern Norway to Thailand.”
But there are indirect costs too. “Vessels
Nordic Bulk Carriers used the NSR again
operating on the NSR during the summer season need to have an
in 2011, when it chartered the bulk carrier Sanko Odyssey to take
ice class acceptable to Russia’s Administration of the NSR (ANSR)
the largest iron ore shipment yet, some 72,000 tonnes from Russia
and meet other Russian regulatory requirements,” says Ozerov.
to China. At the time the company proclaimed: “This historic
”The issue of a permit is not routine – in practice a survey may
sea route has got it all; it is safer, shorter and thereby more
need to be carried out by an ANSR inspector.”
eco-friendly. Said in another way – it is good business. The fuel
savings alone add up to approximately 750 tons. There is no
8. 6 March 2012 Insight
What about the
Alaska
(USA)
No
rt
he
rn Russia
Northwest Passage?
Se
a
Ro
ut
e
Arctic Circle
Canada
The Northwest Passage (NWP) has not seen the same
development as the NSR. There is seasonal traffic on the NWP;
one operator is Northern Transportation Company Limited
(NTCL) and a reduction in ice conditions would no doubt
lengthen its operating season. For transit traffic, although the
route has been opened up by the retreat of the sea ice, the
conditions are different. Large areas of the NSR had no, or very
little sea ice, in the summer of 2011. But hazardous multi-year
ge
Greenland
ice‚ 3–6 metres thick, was still found in the NWP.
sa
as
(DK)
tP
es
The contested sovereignty claims over the waters complicates
W
Russia
n
er
transit shipping through the NWP and the considerable
rth
No
investment needed in escort vessels and infrastructure needs
Iceland to make economic sense for government. Interest is growing
however. Quebec’s government in particular, is looking to
Norway
exploit mineral resources in Northern Quebec. Under its Plan
Nord programme it is investigating transhipment, ice-classed
UK vessels, and icebreaking capacities.
The type of cargo shipped will also have a bearing on the transit in 2012 on four new icebreakers, worth €1.8 billion, and two
viability of the route. Only 22 of the 34 vessels that transited in others are planned. Three of the six will be nuclear powered.
2011 carried cargo and 15 of these transported liquid cargo,
Key global transport route of the future?
mainly gas condensate. A 2005 study funded by the Institute of
One key influence on the future transit use of the NSR is the
the North concluded it is technically possible for container traffic
perceived hurdle of complying with Russian requirements and
to use the NSR but did not look at the economic feasibility of the
uncertainty on icebreaker fees and other dues. Companies will
concept. If Russia continues to develop its Arctic hydrocarbon
want assurance on these before they invest in the route. The
resources, we may see liquefied natural gas (LNG) being shipped
demands faced by the maritime shipping industry to reduce carbon
along the NSR. To achieve this, the industry will need to develop
emissions may yet emerge as one of the drivers for developing the
dedicated high-tech Arctic LNG carriers.
route: but the environmental consequences of increased shipping
The Arctic Marine Shipping Assessment (AMSA) 2009 Report in the region also need to be considered.
highlighted the need for comprehensive economic studies of
The AMSA 2009 Report concluded that “the uncertainties and
the Arctic sea routes, including the NSR, and this is still the case.
complex interactions of many driving forces of trans-Arctic navigation
Russia’s plans require significant research. While it may be technically feasible to
The Russian government has announced its intention to transform cross the Arctic Ocean today … the operational, environmental
the NSR into a commercially viable route from Europe to Asia. It is and economic implications and challenges for routine trans-Arctic
improving safety and communication by building 10 new bases for voyages are not yet fully understood”.
search, rescue and communication along the route. A new law on
The competitiveness of the NSR will increase as the Arctic ice
the NSR is in the pipeline, part of which will clarify tariffs for
recedes and the summer transit period lengthens – and forecasts
icebreaker assistance and other services.
for this retreat are constantly being revised. But its future as a
Investment is also needed in the ageing nuclear icebreaker fleet. viable transit route is less clear cut.
In October 2011, it was reported that construction would begin
E desmond.upcraft@lr.org
9. Insight March 2012 7
Fram: polar voyager
Expeditions to the South and
North Poles began as early as the
1500s and reached fever pitch in
the late 1800s and early 1900s.
Today
March 1895
T
he theory of a trans-polar
current in the Arctic Ocean
was put forward in 1884.
Norwegian explorer Fridtjof northern latitude of 86° 14’ they were The Fram later sailed on two more
Nansen reckoned a strengthened ship forced to turn back and eventually important expeditions; to western
could use the current to get close to the returned to Norway in August 1896. Greenland and to Antarctica for Roald
North Pole. The Fram was the result. Amundsen’s South Pole expedition. The
The Fram, with the rest of her crew,
ship is now in the Fram Museum at Oslo.
Forcing ships through the Arctic ice had continued to drift westwards and in
failed many times before. But the Fram was February 1896 the current turned her Today there is a new Fram in polar waters;
designed to be lifted up and move with the southwards. She finally emerged from the the MS Fram is a 500-passenger capacity
ice, with a hull strong enough to withstand ice and in September returned in triumph cruise ship, owned by expedition cruise
the crushing pressure of the pack ice. To to her port of departure, Oslo, with a specialist Hurtigruten. Built in 2007, this
provide some comfort for the crew, the ship’s significant amount of valuable scientific Lloyd’s Register ice classed ship has a
living quarters were insulated with layers of data – and a healthy crew, unusual for reinforced hull for cruising polar waters
wood, felt, linoleum and reindeer hair. such an expedition at this time. in the summer months.
In June 1893 Nansen set out on the
courageous first Fram expedition. The ship “With MS Fram we wanted to honour Fridjof Nansen’s great efforts, as a
became locked in the pack ice near the
New Siberian Islands in September. She humanitarian, researcher and polar explorer. We built a ship with qualities
was carried for hundreds of miles but did for exploring polar waters, sailing in the wake of Nansen. The ship is small
not get as close to the Pole as Nansen had enough to bring guests close to nature and big enough for comfort. From day
hoped. Realising this, Nansen and Hjalmar
one she has fulfilled her task, sailing both in Antarctic and Arctic waters.”
Johansen took to the ice in March 1895 by
dog-pulled sled. After reaching a record Dag-Arne Wensel, Director of Technical Maritime Operations, Hurtigruten.
10. 8 March 2012 Insight
While activity remains speculative, interest in effectiveness of plant, equipment and processes; and safeguarding
the environment. But the Arctic conditions bring additional
exploiting the Arctic’s hydrocarbon reserves
challenges. The remoteness, limited hours of daylight and freezing
grows at a rapid pace. Further steps in that weather hinder search and rescue operations. Long periods in such
direction will mean grappling with the region’s harsh conditions with extreme periods of day and night can take a
extreme and unique environmental and psychological toll and increase the risk of human error. The heavy
icing of exposed equipment impacts on safety of people and the
operational challenges. The very worst plant. Other risks to personnel are freezing and non-freezing cold
conditions demand the very best practices. injuries, high levels of ultraviolet light, slippery surfaces, falling ice,
impaired visibility and immersion in the Arctic waters.
ModuSpec, the number one provider of offshore
drilling rig pre-charter surveys and assessments, ModuSpec has a seven-step approach in response to these
challenges. This begins before the operation even starts, with
and member of the Lloyd’s Register Group, design and installation. The other steps are establishing a planned
talks to Jason Knights. maintenance system, winterisation, contingency planning, putting
in place management plans and systems, ice protection and
It is -10C and summer in the Arctic; winter temperatures drop to
removal, and regular in-service inspection.
around -40C. Given the severe cold operators drilling in the region
face a number of specific issues. “There must be a full understanding Oil development in sensitive areas, such as the Arctic, is unlikely to
of the environmental conditions in which people, plant and processes be compatible with the view of conservationists. If development is
are working – the three Ps – given the temperature levels, as well as to take place, steps need to be taken to help reduce the risks and
the hydro-meteorological, bathymetric, seismic and ice conditions,” impact at the installation and operational phases. Industry also
says Andrew Calderwood, Senior Project Manager at ModuSpec’s has to appreciate that sourcing energy is rarely totally benign.
Netherlands office. This understanding has led to a heightened As valuable as energy has become, some things are worth more.
awareness that winterisation, preparing for the conditions, is essential
for safe, effective Arctic operations, Calderwood explains.
The operational landscape is as harsh as the region’s treeless Jason Knights is Global Communications Manager
permafrost vista. A number of best practices are critical and the for Lloyd’s Register’s Energy business.
three Ps need to be treated as part of the whole ‘system’.
E jason.knights@lr.org
As with the operation of any high-risk capital-intensive assets, the Tweet me @saferenergy
three areas of main concern are the safety of personnel; safety and
Tackling the
cold, hard facts
Operating safely and effectively in the Arctic
11. Insight March 2012 9
The seven-step solution:
1 Forward-thinking design and installation
To help mitigate risks, the ModuSpec team considers it
imperative to assess a drilling unit during its design. This exercise
5 Putting in place management plans and systems
“The first thing we ask is, ‘What can go wrong?’” says
Meindert Sturm, Business Development Manager, ModuSpec.
can be divided into three distinct areas: hazard identification; “This could be anything from loads falling and harming
likelihood and consequences; and mitigation steps. Factors personnel, to a vessel colliding with an offshore structure
include the need to protect equipment though encasing and and blow-outs.”
appropriate positioning of deck equipment to reduce the
To help prevent disasters, management systems should dictate
likelihood of human error in the harsh conditions.
working methods, in combination with systems that identify
The bottom line is that there needs to be a rigorous, possible threats. For example, an ice management plan will
forward-thinking design and installation process, with clear give the operating crew a series of step-by-step instructions.
communication between the developer, operator and local In extreme weather situations, the rig operators will have
communities who occupy the area potentially affected by a sufficient time to disconnect from the well before an ice floe
proposed project. strikes the rig. Management systems can also incorporate
the use of marine radar or more sophisticated equipment,
2 Establishing a planned maintenance system
An important step is to introduce an enhanced planned
maintenance system that will address substantial risks before
such as radar early warning systems to help prevent collisions.
An oil-spill contingency plan is also vital, considering the limited
time available for a clean-up operation and the environmentally
entering cold climate regions. The system should specifically sensitive area. To this add a couple of facts: “Oil persists for
focus on elements that become safety and operation critical longer in Arctic conditions because it evaporates more slowly,
when drilling in Arctic conditions, such as heat tracing on fire and can be trapped under ice, making it less accessible to
fighting lines and drain lines. bacterial degradation,” says Sturm.
It’s essential to fully consider human factors when devising
3 Winterisation
“The main challenge is making the environment safe
and more comfortable for personnel,” says Calderwood.
management plans and systems. Where neglected, this has
often led to the energy industry having to change the way
it operates. In addition, communities are becoming more
“This requires a deep understanding of the physiological
powerful stakeholders, with clear ideas on how asset
effects of working in isolation.” Given the extreme
owners and operators should prepare, monitor and
conditions, the human factor should not be overlooked.
manage their activities.
“Thorough assessment is required of crew safety and
operations, onboard equipment and fittings, and construction
materials,” explains Ad Tange, Global Commissioning Manager
for ModuSpec. “The first step must ensure all aspects of drilling
6 Removal of and protection from ice
Breaking up ice with mallets, by hand, is still the main
solution. Steam lances and hot water jets are also employed,
unit winterisation meet with the required operating procedures but the use of electrical equipment remains a moot point
for Arctic conditions, including an ice management programme. (while reducing the amount of manual labour required, there
Crew need to be trained and provided with appropriate are question marks over maintenance costs). “Care must be
equipment to work in cold climates, work routines should be taken to prevent damage to equipment,” adds Calderwood.
altered to reduce the time that personnel are exposed to low “Controls, in particular, can suffer mechanical damage, and
temperatures, and sheltered and heated locations must be electrical equipment can be damaged through the ingress
provided for personnel working for extended periods on of water and steam.”
the open deck.”
Mooring equipment on mobile offshore drilling units are also
susceptible to a build-up of ice caused by spray rain, hail and
4 Contingency planning
The various types of evacuation and rescue options
available should be considered in light of the extreme conditions,
snow, especially the forward moorings of floating storage
units. It is not uncommon for machinery to be placed in an
enclosed forecastle. It is also important that the mooring
which often restrict activity. These include the use of offshore
drums are covered so that icing can easily be removed.
standby vessels, helicopters or a Seascape system of evacuation,
and lifeboats designed to operate on ice. “When there is an ice
build-up, unlike in warmer open-water operations, the offshore
standby vessel may have a higher power requirement than a
7 Regular in-service inspection
Adhering to a careful inspection regime and regular
inspection plan is critical.
supply vessel,” emphasises Desmond Upcraft, Ice Cold
Operations Manager, Lloyd’s Register.
12. 10 March 2012 Insight
Governing the ‘po
A
s the sea ice thins and the Arctic Ocean opens states can acquire wider rights by providing scientific evidence to
up, the subject of geopolitics rises to the surface. the Commission on the Limits of the Continental Shelf (CLCS). In
Professor Klaus Dodds from Royal Holloway, turn, this UN body issues technical recommendations for debate
University of London, talks to Jason Knights and negotiation among the relevant coastal parties. “All five states
about some key issues and their potential impact on plans have embarked on mapping projects designed to demarcate their
to exploit the region’s natural resources. extended continental shelves.”
In August 2007, as part of the privately funded Arktika The Arktika expedition is a case in point. To date, only Norway’s
expedition, a Russian flag was deposited on the Arctic Ocean’s maximum sovereign rights have been pinned down, elsewhere,
seabed, provoking headlines and warming the collar of the then “a submission deadline in 2009 for materials to be sent to the
Canadian foreign minister. Symbolic posturing aside, the notion of CLCS encouraged febrile reporting, so if there was ‘a race to
a scramble to lay claim to the region is not just outdated but also the Pole’ it was related to this submission deadline.”
wholly misplaced, explains Professor Klaus Dodds. “Under widely
With the CLCS inundated with enough work to last for 40 to 50
recognised international rules, the entitlements of the five coastal
years, settling shelf sovereignty among the remaining coastal
states [Canada, Denmark/Greenland, Norway, Russia and the
states may be some way off. Awaiting technical recommendations,
United States] are well established over a large portion of the
in fact, is likely to be the tip of the iceberg. “Negotiations will not
Arctic Ocean. There is no need for these five states to scramble.”
be simple when it comes to a region of such strategic and symbolic
Location is clearly everything. “Geographical proximity is key in
importance.” Canada and Russia believe that their sovereign
relation to ownership of the Arctic Ocean.”
rights extend all the way to the central Arctic Ocean.
Cloudier waters
A clear way forward
Where the waters of sovereignty get cloudier is the point at which
“The good news is there are rules and the coastal states seem to
an extended continental shelf ends. On this matter, the United
be following these.” Dodds points to the Ilulissat Declaration as
Nations’ Law of the Sea Convention (LOSC) sets out how coastal
one of the most important regional developments so far in settling
overlapping extended continental shelves peacefully. “In May 2008,
representatives of the five coastal states declared that they were
committed to resolving any overlapping claims in the Arctic Region
and that the ‘law of the sea’ provided a legal framework for such
resolution. Critically, the reference here is to the ‘law of the sea’
and not the LOSC, in recognition of the fact that the United States
is not party to the LOSC. The ‘law of sea’ refers to customary
international law, which applies to all states.”
In addition to this consensus, there is another positive factor for
those looking to exploit the region’s oil and gas reserves. “The
identified hydrocarbon resources seem to fall within the clear and
exclusive economic zones of the five coastal states.” However there
are other natural resources that may hinder negotiations between
the coastal states, emphasises Dodds. These include fishing potential
and a deep seabed which might be rich in manganese nodules and
minerals known as ‘The Area’, an area of the Arctic that is not part
Klaus Dodds is Professor of Geopolitics at Royal Holloway, of the extended continental shelf.
University of London. He is the editor of The Geographical
Journal and his next book will be The Antarctic: A Very How inviting is the Arctic?
Short Introduction (Oxford University Press 2012) followed “A resource-rich, accessible Arctic is an image peddled by journalists
by A Scramble for the Poles? Contemporary Geopolitics and sometimes politicians, but does it pass muster politically and
of the Arctic and Antarctic (Polity 2013). economically?” asks Dodds. Is it yet the ‘polar Mediterranean’
predicted by the Canadian geographer, Viljamur Stefansson?
13. Insight March 2012 11
lar Mediterranean’
“One can’t view the Arctic as a blank space on a map, emptied 200 kilometres from the Sakhalin coast in the Sea of Okhotsk
of people.” The region is a mosaic of different places. “In the (Russian Far East), is “a timely reminder, albeit in the sub-Arctic,
Canadian Arctic, oil and gas companies have found it challenging of the extraordinary operating conditions and challenges faced.”
to operate, with an indigenous population that holds clear rights, All at a time when “reputations travel fast” and companies
is pressing on outstanding land claims and holds diverse views on cannot afford to make mistakes in the Arctic or elsewhere.
the exploitation of natural resources. One of the common pitfalls
Later rather than sooner
is the erroneous assumption that all indigenous people think the
“Exploitation of the Arctic’s natural resources may take longer
same. This must be avoided. The people want their respective
than expected if the recent past proves enlightening,” says Dodds.
views to be heard and to be treated seriously. While many in the
He highlights two projects severely delayed by politics and
local communities welcome the benefits that industry brings in
economics. Plans to develop the Shtokman (Stockman) field in
terms of new jobs and revenue streams, others see the downsides
the Russian sector of the Barents Sea, one of the world’s largest
and are weary of being short-changed by the ‘South’ once again.”
natural gas fields, began in the early 1990s and was “postponed
by stockholders a few years ago because of the sudden over-
“Exploitation of the Arctic’s supply of gas on the market and then hindered by the economic
weakness of Russia.” The MacKenzie Valley Natural Gas Project in
natural resources may take longer Canada’s Northwest Territories (connecting northern onshore gas
than expected if the recent past fields with North American markets) also has a long history, dating
back some 40 years. “The project has been subject to lengthy
proves enlightening” negotiations with indigenous communities.”
What next?
The key players in the Arctic do not want a treaty, as exists in the
Then there is the wider political debate of whether we should be
Antarctic, says Dodds, so “the Arctic Council will play a key role
looking for more sustainable energy sources. “As the Norwegian
and must to be seen to be effective.” The Council is the most
foreign minister [Jonas Gahr Støre] pointed out, this is a global
significant soft-law intergovernmental forum for the promotion
paradox, not just an issue for the Arctic states.” While Dodds
of co-operation in the Arctic. Members comprise the five coastal
privately hopes that we will have largely ‘de‑carbonised’ by the
states, along with Finland, Iceland and Sweden. “The Arctic
time anyone gets around to exploiting the Arctic’s most inaccessible
Council faces a difficult job ahead. It will need to be more than
resources, he acknowledges that we all want to heat our homes,
advisory in the longer term. A legally binding search and rescue
drive cars and board planes. And “for the indigenous Northern
agreement and a proposed oil-spill response plan are promising
communities, hydrocarbon and mineral resources could prove
signs, and it must also be seen to be meaningfully championing
valuable revenue streams.”
the rights of indigenous and First Nations communities.” It also
What of the broader economics? “Financially, one can’t put a value needs to be careful that environmental stewardship is not merely
on 22% of the world’s untapped hydrocarbon resources that the regarded as self-interest, cloaked in virtuousness. “Wider interest
geology of the region suggests. We need to be quite cautious as in the Arctic will only increase, especially with regard to ‘The Area’
to how much will be discovered, let alone extracted. Recent Cairn and general navigation and access rights. The Council will need to
Energy results for exploration wells offshore of Greenland were a be comfortable with that notion. Being graceful with observers,
bit disappointing.” Uncertainty in the riches may well be reflected such as the European Union and China, a major coastal state with
in the political wavering of Greenland’s prime minister, Kuupik a keen sense of its rights of innocent and transit passage, may be
Kleist, in the push for autonomy from Denmark, points out Dodds. the price to be paid to avoid tensions. The list of Arctic Ocean
To an unknown total hydrocarbon value, add unpredictable stakeholders will surely only get longer – the geopolitics of the
long-term markets, with ever-fluctuating oil and gas prices. Arctic region will stretch rather than remain fixed.”
“Does diminishing sea ice even open up the region, operationally
speaking?” questions Dodds. Ice remains a problem and it is still Jason Knights is Global Communications
an inhospitable region in terms of tsunami-like waves, high winds Manager for Lloyd’s Register’s Energy business.
and heavy winter storms. The upturned Russian oil rig, Kolskoye,
E jason.knights@lr.org Tweet me @saferenergy
14. 12 March 2012 Insight
On a
deadline
to
2041
Saving Antarctica: The last great wilderness
Robert Swan, OBE, polar explorer and environmental leader
is on a mission to protect Antarctica, reports Richard Cook.
15. Insight March 2012 13
Robert Swan is, as ever,
in full ‘attack’ mode.
“The world is stuck on words,” he says,
“and we need to move on from that. We
need to act not just speak. We need to be
intelligent with technology. And we need
to be positive. If I get sent another gloomy
email or video about how the world is going
to end, I am going to…” Swan pauses and
seems uncharacteristically lost for words.
“I am going to…” he pauses again, laughs
and shouts in mock horror, “… I am going
to shout at someone.”
This is classic Swan: serious, passionate,
a little scary but also always very quick to
turn to humour to drive his point home.
He is straight talking to the point of being
brusque and he peppers his proclamations
with the word ‘attack’, which sums him up
well, as Swan’s life can be seen as a series
of interconnected attacks – be it when
he is running fund-raising marathons or
delivering clever, high-tempo motivational
lectures to corporations, students and
politicians or speaking about his life’s “We must be positive and we must act,” The ship they chose to carry them from
work, Antarctica. says Swan. “Once you move from words the UK round the Cape of Good Hope
to action, then you start to build the and through the notorious southern
The greatest challenge knowledge that can bring about real oceans was the Southern Quest. Swan’s
Swan is the first person in history to have change. Then change can become a team found the vessel in Tyneside, UK,
walked to both the North and South Poles business opportunity and that is when it where she had been working as a trawler.
but while he is justifiably proud of these actually becomes powerful. Technology “We didn’t completely know what we
incredible achievements, today he quickly and safety is what will save us,” he says. were doing,” says Swan with a self-
dismisses the term ‘polar explorer’. “I don’t deprecating grin. “A lot of people laughed
really know what that means anymore. The A young explorer
when we said we were going to take the
only exploration that really matters now is Swan grew up obsessed with the
ship to Antarctica but someone said you
working out this planet’s survival. That’s early 20th century heroes of Antarctic
need to talk to Lloyd’s Register, they’ll tell
the greatest challenge.” exploration. In the early 1980s, aged
you what you need to do and that’s exactly
just 21, he started to assemble the first
Spend about a minute with this enigmatic what they did. And they were fantastic.”
non-government expedition to Antarctica
man and you will quickly find the real and the South Pole and started to try to Lloyd’s Register ship surveyors gave Swan
Robert Swan. Today he is an inspirational raise the not inconsiderable amount of advice and certified the ice strengthening
environmental leader, a renewable energy US$5 million to fund the expedition. Swan work that was carried out on the Southern
champion and, above all, a passionate, thought he would do it in a ‘few weeks’ Quest. Brian Purtle, now Lloyd’s Register’s
engaged, energetic protector of his but it actually took him more than seven Technical Performance Group Manager,
beloved Antarctica. years. His drive brought him in front of was one of those surveyors and recalls:
Swan firmly believes that if we can the father of the conservation movement, “We had started to do a lot of conversions
educate and inspire tomorrow’s leaders French marine biologist Jacques Cousteau, in the early 1980s in the North East as the
into protecting Antarctica through the who said he could help Swan raise the offshore business was booming – trawlers,
better use of renewable energy and waste funds if they would leave not a trace of supply boats, that type of thing – but there
reduction systems, these lessons and waste, “just their footsteps in the snow”. were not many clients like Mr Swan and
actions can be carried back into mainstream Swan agreed – and is still very much driven his team. They were an eccentric group
communities across the planet. by this solemn promise today. And as funds of people and to tell the truth, we did
began to slowly trickle in, Swan started not think they would make it. I remember
to build a team and purchase equipment. several issues related to the ship being
16. 14 March 2012 Insight
fit to undertake the journey and the crew This almost killed him, then deeply Cleaner Energy’ that has, to date, connected
certainly made the most of the time in dock. depressed him and finally galvanized him. with 500,000 students from across the
One thing that sticks out is they strapped a world. Swan has just cycled across India
2041 mission
beer barrel to the mast… something to do to work with India’s youth who, he says
In 1992 and 2002, he gave keynote
with a sponsorship by a local brewery and “have to be part of the solution rather
speeches at the World Summit for
maybe some free beer! It was all very novel than the problem.” He currently serves
Sustainable Development and was
but they were a good bunch.” as an UNESCO Goodwill Ambassador with
charged by global leaders to undertake
special responsibility for youth, acting as a
Swan’s ‘good bunch’ made it to the environmental missions with industry,
special envoy for the UN Director-General.
South Pole on 11 January 1986. The wholly business and students. He has called his
And he is now, once again, working closely
unassisted expedition (without even radios) organisation 2041 because his overriding
with Lloyd’s Register.
comprised three people, each pulling a life mission has a hard and fast deadline.
160-kilo sled laden with food, fuel, supplies In less than 30 years’ time, in 2041, there Lloyd’s Register is sending two employees
and shelter, for 70 days across 1,400 will be a renegotiation on the United and one E-idealist (see page 20) on Swan’s
kilometres. Swan’s team took everything Nations moratorium on mining in next annual Antarctic expedition to work
back with them afterwards and repeated Antarctica. The continent’s designation on renewable energy and environmental
this after they reached the North Pole as ‘a natural reserve, devoted to peace and projects. Initially these projects will have
in 1989. science’ could be rolled back and Swan’s application in Antarctica but, over time,
singular aim is to stop should have resonance across the globe.
It was on these
this happening.
journeys that Swan “Lloyd’s Register understands modern
saw the effects Swan’s overriding Everything he technology and checks that it works
of environmental does is aimed at which means they are an important part
degradation first mission, to continue working towards the of moving things forward” concludes Swan.
hand. In Antarctica,
the governmental
the protection of continuing protection
of the Antarctic
“It’s fantastic that they care enough about
their people to invest in their involvement
expeditions left Antarctica, has a Treaty so that the with 2041. I have had a long and good
thousands of tonnes
of rubbish strewn
2041 deadline. last great wilderness
on earth is never
relationship with Lloyd’s Register and am
glad that it is re-kindled and is as strong as
across the ice. On a exploited in the same ever. We will do very good work together.”
more personal level, way that the North
the team was affected by the then little Pole has been and continues to be. For more details of 2041 and Lloyd’s
known effects caused by the hole in the His strategy is simple – to generate Register’s work on the next Antarctica
ozone layer. Swan’s eyes first blistered, awareness but, more importantly, action expedition go to www.lr.org/2041
then turned him temporarily blind and then among tomorrow’s thought leaders who
changed colour permanently, from dark to will be in positions of real responsibility Richard Cook is Lloyd’s Register Asia’s
light blue. On the way to the North Pole, when the critical decisions are being Communications Manager.
Swan and his comrades found the solid ice made in three decades’ time.
that should have been there had melted E richard.cook@lr.org
He is relentless in his work. His yacht 2041
and the team had to hop from ice floe
has sails made of recycled plastic bottles
to ice floe to complete their journey.
and travel the oceans on her ‘Voyage for
17. Insight March 2012 15
The shipping industry is under pressure to comply with ever
stricter environmental regulations and, with oil more expensive
than ever, to reduce fuel costs. Nick Brown talks to Bergen-based
Gearbulk Norway about the future of shipping.
Gearbulk is the world’s largest operator of open hatch, Fuel type is another area of attention. With conventional heavy
gantry craned ships – general cargo ships primarily designed for fuel oil so expensive and an increasingly high focus on emissions,
transporting forestry products. And it has led the way in evolving alternatives are being sought.
the designs of its ships. The ships’ large cargo holds allow for an
Gjerde thinks that it’s only a matter of time before we see an
efficient stowage and flexibility of cargo type. Gearbulk seeks to
increasing use of LNG in the deep sea. “It’s obviously attractive
maximise cargo opportunities. It has invested in the capability to
in Norway where there is a ready supply. The likely middle ground
support other niche trades such as liquid pitch and orange juice.
for some time is dual fuel engines.
The company is always discussing the next generation of Gearbulk
“Shipping has been hopelessly conservative. We need fresh views.
ships. “Right now, for example, we are looking at different engine
We probably need to take a fresh approach to recruitment as we
and hull performance monitoring systems on our newer vessels,”
need to find the right balance between practical engineering
says Sjur Gjerde, Managing Director of Gearbulk Norway.
experience and commercial requirements.
“There are huge savings to be made, better hull forms, better
“We have to sort out the technical issues – and we always can
engines – but we need to be able to measure performance –
– but it’s the human issues that are the most challenging. As an
so many claims are being made about performance by suppliers.
industrial player with a long-term approach, intending to operate
We want to tie yards and suppliers to the mast on their claims
our specialist ships for 35 years or more, we are very interested in
for efficiency gains. Half of the salesmen walk away when
finding the right solutions – it’s a constant process of innovation.”
we say this – but we can work with the others.”
But things are moving in the right direction. “Over recent years the A longer version of this interview will appear in the next edition
industry had to face a ‘take it or leave it’ situation when ordering of Lloyd’s Register’s Shipping the Environment. Nick Brown is
new vessels in terms of accepting yard standard volume design. Lloyd’s Register’s Marine Communications Manager.
Now we are seeing yards trying to grab competitive advantage by
offering more fuel-efficient ships – especially in Japan – and we are E nick.brown@lr.org
seeing the potential for soft funding for environmentally efficient
ships, those with a low Energy Efficiency Design Index.”
18. 16 March 2012 Insight
New fuels, new engines
new designs
Future technology and innovation is needed
in shipping as emission regulations and fuel
prices drive change, says Tom Boardley,
Lloyd’s Register’s Marine Director.
A vision for a sustainable shipping industry in 2040
In November 2011, the heads of some of the most significant
players in world shipping put their names to a commitment
to make shipping more sustainable. The Sustainable Shipping
Initiative (SSI) brings together leading companies from across
the industry and around the world, to plan how shipping can
contribute to – and thrive in – a sustainable future.
Representing Lloyd’s Register as one of the signatories
was Marine Director, Tom Boardley. He said “The SSI is an
important initiative. At a time when many are struggling to
stay in business, investing in a cleaner future is perhaps not
everybody’s favourite subject. But what makes a business
sustainable is changing. At Lloyd’s Register we are putting
ever more resources into helping owners, builders and all
marine stakeholders better understand the implications of
new regulation and technology in our more complex world.”
19. Insight March 2012 17
One hundred years ago a Lloyd’s Register New technologies and innovation
The result is that the shipping world is fast becoming a more
surveyor attended the sea trials of the first
complex place. New technologies and innovation will play a
seagoing diesel-powered merchant ship, vital role in the immediate and long-term future of shipping.
the East Asiatic Company’s innovative Selandia. Lloyd’s Register has talked about this as a ‘new paradigm’. Any
The propulsion technology on trial a century evolution will be gradual but already we can see changes happening.
ago now dominates the industry and, for New fuels, new engines and new designs are becoming available.
most merchant ships in the last 50 years, there The difficulty for shipowners, builders, equipment makers and, do
has been a clear orthodoxy in engine room not forget, financiers, is not only what technology to support but
arrangements and the type of fuel used. when to invest. The future is further clouded by the weak market
outlook and the hangover of the biggest boom in new ordering
Nearly all ships now use marine heavy in history – the new ships still being built are, in the main, little
fuel oil in diesel engines. different to the ships in demand a decade or more ago.
Today we stand on the brink of a new era. Most new technology being brought into operation now has been
Emissions regulation and higher fuel oil prices are driving change developed for relatively small or niche markets such as ferries and
in shipping today. Future fuels, the future for marine engines and inland waterways – sectors where exposure to new regulation is
tomorrow’s ship designs are key areas that Lloyd’s Register is most concentrated and where local emissions and other factors
working on to help the marine industry to reduce emissions are felt most keenly.
and find greater efficiencies. More clarity needs to be brought to the differences between
Regulations requiring ships to produce less locally harmful pollutants, local air emission benefits and the GHG impacts of shipping
such as sulphur oxide (SOx) and nitrogen oxide (NOx), in emission and the technologies required. At present the real driver is local
control areas (ECAs) such as the Baltic and North Sea are due to be air emissions. But, for example, we really need more data on the
made stricter from 2015. Ships will need either to switch to different, total energy lifecycle impact of fuels such as LNG. There is plenty
cleaner, fuels or install abatement systems – ‘scrubbers’ – to extract of work to be done here.
harmful emissions. Approximately 80–90% of merchant vessels will At Lloyd’s Register we constantly strive to provide impartial
enter an ECA during their lifetimes and more ECAs are expected – technical guidance. And as well as guidance, verification is crucial.
particularly in the Mediterranean and the Far East – in the future. Many claims are being made about performance, about GHG
In terms of greenhouse gases (GHG), the International Maritime emissions and about safety of new arrangements. Owners and
Organization (IMO) has developed global energy design and operators need data and they need it verified – what you cannot
energy management regulations that will help reduce the measure, you cannot manage.
tonne mile GHG impact of shipping. The Ship Energy Efficiency
Management Plan (SEEMP) and, for new ships, the Energy Tom Boardley is Lloyd’s Register Marine Director.
Efficiency Design Index (EEDI) will come in to force in 2013.
These are the first such global regulations to mitigate GHG E tom.boardley@lr.org
emissions made by any United Nations agency.
But with the consequences for shipping of the UNFCCC process
still not clear after COP 17, a global GHG regime seems as remote
as ever. The agreement to the second Kyoto Protocol commitment
period, covering mainly EU member states, makes it more likely
that the European Union will take action on shipping – indeed
it is starting the process of investigating how a regional GHG
scheme could work for shipping. As a global industry requires
global regulation it is far from clear what the impact of
regional imperatives will be.
At the same time the price of fuel oil has been rising dramatically. Our recent special Horizons supplement looks in more depth at
Existing ships were developed to operate in a world where ships’ the future challenges for shipping; go to www.lr.org/marine.
bunkers were available at US$150 a tonne. Bunker oil is now in Our next issue of Shipping the Environment, due out in
the US$700-800 range. So, the economics of ship operations March, will look further into the environmental issues, what
have changed. operators and shipyards are doing, as well as at specific
regulatory compliance requirements and tools to help the
industry in reducing environmental impact and capturing
efficiency gains.
20. 18 March 2012 Insight
New
steerage
at the IMO
Koji Sekimizu talked to
Christopher Browne about
the role of the IMO and
his key aims.
Koji Sekimizu of Japan was elected in
June 2011 as the Secretary-General of
the IMO with effect from 1 January
2012, for an initial term of four years.
21. Insight March 2012 19
The International Maritime Organization (IMO)
Role of the IMO
should lead the global fight against piracy, says We asked Koji Sekimizu what
Koji Sekimizu, IMO’s new Secretary-General. in his view is the IMO’s most
important role.
“There needs to be a formal mechanism to A passionate advocate of sustainability, “IMO is a specialised agency of the
discuss and tackle piracy and there should one of Sekimizu’s first tasks will be to United Nations and, as such, it is the
be one organisation to govern the problem. co-ordinate IMO’s presence at the UN global standard-setting authority for
IMO, as the UN agency responsible for Conference on Sustainable Development the safety, security and environmental
regulating various aspects of international – known as Rio+20 to mark its 20-year performance of international shipping.
shipping, is competent and has the relevant history – in Rio de Janeiro on 20–22 June. Its main role is to create a regulatory
expertise to address this,” said Sekimizu, On the agenda are the future of the green framework for the shipping industry
who recently signed an agreement for economy and ways to develop a new that is fair and effective, universally
IMO to fund an anti-piracy training centre framework for sustainable shipping. adopted and universally implemented.
in Djibouti, on the border of Somalia. “Although sustainability of shipping has To create, in other words, a level
been widely discussed in the context of playing field so that operators cannot
“IMO, in co-operation with the UN, address their financial issues by simply
sustainable development over the last
needs to deal with pirates and criminals cutting corners and compromising on
two decades, we have not yet developed
in Somalia, as well as helping the Somali safety, security and environmental
a common concept for the sustainability
people to deal with pirates internally, performance. This encourages
of the maritime industries and in particular
in order to ensure their eradication, innovation and efficiency.
the shipping industry,” he said.
for without addressing these issues
we cannot eradicate them,” he said. Sekimizu wants IMO to play a more “Such a performance-based approach
proactive, policy-driven role. “The role was taken by IMO, for example, with
The 59-year-old, who was Director of regard to climate change and air
of IMO is very important and it is up to
IMO’s Maritime Safety Division until his pollution. Mandatory measures
us to make sure there is more co-operation
recent promotion, is something of an adopted by IMO will require the
between individual governments, so the
expert on piracy. He has represented IMO energy efficiency of new ships to
world economy can enjoy a continuous
on the Contact Group on Piracy Off the improve incrementally, but leave it
environment-friendly and low-cost supply
Coast of Somalia and was actively involved to the industry to determine exactly
of goods,” he said.
in the 2009 Seoul high-level meeting on how the targets will be met.
piracy in the region. His other goals for the UN agency are
to help develop new global goal-based “IMO also works hard to help build
Shortly after he took office on 1 January the capacity of its Member States
standards for ships; various safety-related
2012, Sekimizu appointed Captain Harmut to address issues within its purview,
issues, including the safety of passenger
Hesse, Senior Deputy Director in the and this is a central theme in our
ships; ensuring that the education, training
Maritime Safety Division, to the position of continuing work to combat piracy,
and recruitment of seafarers provides a
special representative for maritime security for example.
continuous supply of quality mariners;
and anti-piracy programmes. Hesse will
drafting new maritime security and “I feel very strongly that IMO needs
also co-ordinate the Djibouti Code of
anti-piracy legislation; and maritime traffic to act in the interests of all those
Conduct and act as IMO’s representative at
management in straits and key sea areas. who rely on shipping as the delivery
conferences and meetings on piracy issues.
mechanism of global trade – and
However, as IMO Secretary-General, Christopher Browne is Lloyd’s Register’s that means the vast majority of
Sekimizu’s brief is obviously far wider than Marine News Editor. the world’s population. We all
piracy. He is known as a highly creative need a shipping industry that is
problem-solver and, in his 22-year IMO E chris.browne@lr.org safe, secure, environment-friendly
career, has had extensive experience of and efficient, and it is IMO’s job,
handling and helping to draft safety, as the industry’s regulator, to make
environmental protection and anti- sure that is the case.”
emissions legislation. As Director of
IMO’s Environment Division he oversaw
the phasing out of single-hull tankers
after the Erika and Prestige disasters
in 1999 and 2002 respectively.
22. 20 March 2012 Insight
Empowering
eco visions
A new initiative called E-idea is helping young
eco-entrepreneurs to develop innovative environmental
projects and businesses to benefit communities in the
Asia-Pacific region. Graham Meller reports.