Shipping-marked i endring - SINTEF...Shipping-marked i endring 2012-10-02 2 The Shipping Outlook is...

Tor E. Svensen, President DNV Maritime and Oil & Gas2012-10-02

Shipping-marked i endring

Betydning for den norske maritime næringen

© Det Norske Veritas AS. All rights reserved.


2012-10-02

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The Shipping Outlook is dramatically different from 4-5 years ago The aftermath of the financial crisis in 2008 still

causes disturbances in global markets- Fragile rates in most shipping segments- Some owners and yards are financially challenged- Difficulties in financing new and ongoing projects

The environmental agenda continues to develop driven by IMO, EU and civil society- Energy Efficiency Design Index and Ship Energy

Efficiency Management Plan (SEEMP) implemented- Implementation of revised MARPOL Annex VI- New Emission Control Areas - Implementation of Ballast Water legislation

The Safety agenda is re-emerging- Large scale accidents in focus after the Fukuisjima,

Macondo and Costa Concordia- Safety-barrier thinking emerging in Shipping



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Global megatrends

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What are the direct implications for Shipping

towards 2020?



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Why Shipping 2020? : Difficult choices ahead

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How does this affect the ship owner?

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The next decade poses some important questions for the ship owner

When should I install ballast water treatment systems?

Should I meet sulphur regulations through investing in LNG fuelled engines or scrubbers, or by fuel switch?

Do I need a NOx Tier III compliant vessel enabling global operation?

What is my cost-benefit of going beyond compliance on the EEDI?

???



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DNV have looked at some scenarios…

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LOW

LOW HIGH

HIGH

SCENARIO D:IN THE DOLDRUMS

SCENARIO C:SINK OR SWIM

SCENARIO A:FULL STEAM AHEAD

SCENARIO B:KNOWING THE ROPES

REGULATORY AND

STAKEHOLDER PRESSURE

ECONOMIC GROWTH

High economic growth

High fuel prices

Little regulatory or stakeholder pressure on environment

Low economic growth

LNG price decouples from oil price

Little regulatory or stakeholder pressure on environment

Low economic growth

Limited implementation of MBM gives a medium price on CO2 emissions

Low fuel prices in general, but high demand keeps the MGO price up

High economic growth

Cost of CO2 emissions up and on the rise in 2020

LNG price decoupled from oil price and is significantly lower



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Methodology: Variables included in the simulation

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SHIP TYPE/SEGMENTNumber of shipsAge distributionME & Aux power

Number of aux enginesBallast water capacity

Existing ships ME & Aux SFCNewbuildings ME &Aux SFC

SHIP OWNER & OPERATIONAL PROFILE

Days in cruiseDays in ECAs

ME & Aux engine cruise loadInvestment horizon

Discount rateShare of fuel paid

TECHNOLOGIESCapital & operating expenses

Retrofit capital & operating expensesFuel reduction ME & Aux

Learning rate

SCENARIOSFuel price variablesFleet development

(newbuildings, scrapping)CO2 price trends

Regulatory requirements

INPUTPARAMETERS



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201220132014201520162017201820192020

Assign each ship a ship owner investment profile

Remove scrapped ships from the fleet each year

Add newbuildings to the fleet each year

Generate a representative sample of the current world fleet

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Annual technology and fuel type decisions per ship

Technology cost decreases with more installations

Results

Fuel price and regulatoryrequirements

Growth in seabornetransport

Technology alternatives

Investment profileand shipcharacteristics

Model illustration : simulation of individual ships



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Findings

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Finding 1

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More than 1 in 10 new buildings in the next 8 years will be delivered with gas fuelled engines

LNG price, sulphur limits and EEDI are the main drivers

From 2012-2019 the LNG price is the main contributing factor

When approaching 2020, EEDI and sulphur limits will create additional motivation for LNG as fuel- In Scenario D, 35% of newbuildings will be

delivered with LNG engines

In scenario D, we foresee about 1,000 newbuildings from 2012-2020 and some 6-700 retrofits

Share of LNG fuelled newbuildingsScenario D



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Finding 2

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In 2020, the demand for marine distillates could be as high as 200-250 million tonnes annually

A 0.1% limit in ECAs (2015) is expected to increase the demand to 45 million tonnes

- The current annual global demand for marine distillates is about 30 million tonnes

With a global sulphur limit HFO demand may drop from 300-350 million tonnes to only 80-110 million tonnes in 2020

- Depends on the number of scrubbers in use- The use of LNG will not significantly impact the

demand of other fuels- Energy efficiency measure will only slow the fuel

demand in the short term

Fuel mix in 2020



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Finding 3

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Newbuildings in 2020 will emit up to 10 to 35% less CO2 than today’s ships. The EEDI will be a driver for more than half of this reduction

Phase 0 of EEDI (2013) will encourage cost-effective measures

In Phase 1 (2015) and 2 (2020), up to half the reductions are motivated by EEDI alone

- Due to short investment horizon and low fuel burden, these reductions are not cost effective for the ship owner

- But in the long-term these are cost-effective

Small differences between scenarios- Fuel prices are already so high that any

variation does not affect uptake

Operational measures not included

CO2 emission reduction on newbuildings

EEDI reduction on newbuildings



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Finding 4

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Scrubbers are a significant option after 2020

Few ships spend more than 30% of their time in and ECA justifying a scrubber before 2020

In 2020, with the global sulphur requirements, scrubbers become a significant solution

- Scrubbers can be retrofitted and can take 25% of the market, 15-20,000 ship

- Still, 70% of ships will run on distillates - In the short term LNG can only take a small

part of the market

Uncertainty about the 2020 limit will slow technology development and uptake

Ship owner investment profile

SOx reduction options in 2020



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Finding 5

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Ballast water treatment systems will be installed on at least half of the world fleet

The Ballast Water Management Convention has not yet entered into force, but

- The schedule for mandatory treatment of BW is fixed (2019)

- The US has decided to implement a similar scheme for all ships in US waters (2013)

- Other countries have local requirements

This will motivate a significant part of the world fleet to implement a treatment system irrespective of BWMC progress

Annual expected ballast water treatment installations



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Finding 6

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At least 30-40% of newbuildings will be fitted with EGR or SCR by 2016

Both EGR and SCR are currently under development and need more time to mature

LNG is an alternative but does not seem to replace more than 25% of EGR or SCR installations

- Dependent on LNG price

Will a ship owner will opt for a Tier III engine even if the ship is initially not planned for sailing in an ECA?

- Lower second-hand value due to the loss of geographic flexibility

NOx treatment installations



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Summary of findings

More than 1 in 10 new buildings in the next 8 years will be delivered with gas fuelled engines

In 2020, the demand for marine distillates could be as high as 200-250 million tonnes annually

Newbuildings in 2020 will emit up to 35% less CO2 than today’s ships. The EEDI will be a driver for more than half of this reduction

Scrubbers are a significant option after 2020

Ballast water treatment systems will be installed on at least half of the world fleet

At least 30-40% of newbuildings will be fitted with EGR or SCR by 2016

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What does this mean forNorway?



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Global Competition - Future

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Norwegian Maritime Cluster

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Moving with the customers where the Business is



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How are our customers positioning themselves?



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Where are then the opportunities ahead?



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Innovation is a must…

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Quantum 9000 : Containership

Full ECA complianceFull ECA complianceFull fuel flexibilityFull fuel flexibility

Environmentally friendly


Efficient machinery solution

Efficient machinery solution



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Ballast free hullBallast free hullNatural Gas as FuelNatural Gas as Fuel

Cool airCool airVOCVOC

Triality : A VLCC of the future



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Full fuel flexibilityFull fuel flexibility

Cost effective solutions

Cost effective solutions

Efficient cargo loadingEfficient cargo loading

Reduced need for ballastReduced need for ballast

Designer: Karolina Adolfsson, FKAB

Ecore : The eco-friendly ore carrier



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FlexibleLarge work deck that can be used as a platform for a variety of operations

SafeStable and sheltered work deck for safe operations

Hybrid machinery Configuration providing high flexibility and energy efficiency

Purse seiner /pelagic trawlerEquivalent to state‐of‐the art fishing vessels

Wave‐piercingforeship design for better sea‐keeping and reduced resistance in waves

Prismatic LNG tankMaking the most of the available space

Waste heat & cold recoveryImprove energy efficiency

Vital statistics

Lpp = 59.0 m

Loa = 61.5 m

B = 12.0 m

T = 5.5 m

Speed = 16kn /17.5kn

RSW = 1000m3

Endurance = 2 wks LNG + 2 wks fuel oil

LNG volume = 220m3

Catchy



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Energy Efficiency and Emissions will drive the agenda for years

ahead…

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Joint DNV – Kawasaki LNG driven containership

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9000 TEU containership powered by LNG following DNV’s innovation concept “Quantum 9000” This ship is designed with a prismatic Type B LNG fuel tank that allows for more space for container

cargo



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Seaspan - “SAVER 10,000” NewPanamax container ship of 10,000teu

Hull optimised for operational profile giving significant fuel and environmental savings

Optimised for best performance at 13–14m design draught and speed range of 18kt and 22kt, but with the ability to operate at 24.5kt or higher if needed

Nominated for Next Generation Ship Award Nor-Shipping 2011



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Quantum Implementation: SAVER 10,000TEU – Hull Optimization

Project was done in close cooperation between DNV, owner, yard and designer

DNV assisted in main dimension selection- shorter and wider than original design with low Cb (0.6)

CFD calculation to verify preliminary design and power prediction

Hull line optimization with focus on bulb, foreship and transom- bulb study, focusing on a wide speed range (original bulb was only optimized for high

speed)

Carried out review of model test scope and verified the results- DNV attended all model tests



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Quantum Implementation: SAVER 10,000TEU – Hull Optimization

-> 10% improvements in hull performance from original design

-> 20% fuel consumption reduction pr TEU compared to Seaspan 9600TEU design



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Hull design boosts fuel economy of ultra large container ships

Collaboration involving APL, Hyundai Heavy Industries and DNV

10 new 13,800 TEU container ships

The first of the them is under construction at HHI and will be delivered next year

20% more fuel efficient per TEU compared with existing designs

Optimized for flexible operation - speed and draft range

Annual operational saving- 3 mill USD per ship

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Operating profile for the world largest container ships

Most container ships optimized for high speed full load

Future container ships to operate at a wide range of speeds and loads

Efficiency at speed and draft range -key for reduced fuel consumption

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Designpoint



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Speed development for ultra large container ships

Average of 4 East Bound and 4 West Bound legs

90%



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Oshima ECO-ship 2020:The open hatch bulk carrier of the future

Environmental friendly

Energy efficient

Cost-effective

Flexible operations



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By SDARI, DNV and Wärtsilä

Green dolphin – Bulk carrier

Objective– Meet ship owner and shipyard needs as well as environmental regulations

Focus areas– Fuel efficiency– Operational flexibility– Robust and reliable– Environment-friendly and

prepared for future regulationsInput from ship owners



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Development of new tanker concept with Teekay ShippingFuel Efficient Design

On revised hull lines: DNV calculated added resistance in waves by state of the art software. Comparison with model test results.

On propulsion solution: DNV substantiated the possibility to apply a more efficient 3 bladed propeller instead of 4 bladed propeller, in terms of global hull vibrations.

Estimate of fuel saving based on model test results

Calculation and advise related to Energy Efficiency Design Index (EEDI)

Estimate of steel weight and strength of initial design

Next generation tankers

Reduced fuel consumption by ~ 30%

DNV SOLUTION



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JIP – Energy Efficient Offshore Vessel OperationsPhase 1 : 7 OSV Owners

Current practice

Improvement areas

Guidelines for best industry practice

16% saving potential identified

Phase 2 : 7 OSV Owners + Charterers

Procedures and guidelines

Communications

Incentives schemes

Goal: Ensure piloting and implementation



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Safety, Quality & Operational Reliability is a given

– but probably some re-focus will be needed

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Our basic assumption about how to manage these challenges has been wrong….

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The hopeThe idea The reality

The hope

The reality…



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Navigational accidents are still a major contributor

(Seagoing tankers, bulk carriers, dry cargo and passenger vessels (A) 500 GT and above)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Distribution of navigational vs. non-navigational accidents(all severity categories)

Non-navigational

Navigational

Source: IHS Fairplay, DNV research



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Key lessons learned from major accidents

We know 99,5% of the risk picture – not black swan events

Major accidents are usually a result multiple barriers failing

If one of the failing barriers had worked, the accident would have been prevented

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Taking the safety performance to a new level requires that we address barriers in a more systematic and structured approach



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Identification and efficient use of safety barriers is key to achieving risk reduction



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The bow tie approach has proven to give good oversight

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Top Event

Threat

Threat

Consequence

Consequence

Prevention Mitigation



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Barriers need to be managed as holistic systems with clear roles and responsibilities



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Three main elements in safe operation

Technical and operational standards- The “built in” margins against accidents and failures

Additional preventing and mitigating barriers- Additional capabilities to prevent accidents and failures

Maintaining the integrity of barriers over time

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Where should shipping focus ? Putting safety on top of the corporate agenda

Properly identifying risks and hazards and ensuring that adequate safety barriers are in place

Addressing safety culture and the management dimension

Putting more attention on preventing (rare) large scale accidents

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Regulatory Outlook

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Demanding regulatory timelineCO2 SOx NOx Ballast



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Regulatory compliance is given, but is not equal to risk management

Risk controlling effectiveness

FlagMA

RP

OL

ISP

S

Cla

ss

STC

WSO

LAS

MLC

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Environmental and safety risk spectrum

ISM



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Summing Up…

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2012-10-02

Shipping is facing oversupply and difficult years ahead

Energy efficiency & environmental agenda are driving new design developments

Shipping is facing a new innovative cycle were new solutions were have to be found to meet energy efficiency and regulatory demands- New designs already in production show 20-30% improvement

The Norwegian shipping industry today is more focused on technology, equipment, competence and services. This trend will continue

Quality, Safety & Operational Reliability is a given BUT there is a need for shipping to re-focus on safety barriers to prevent large scale accidents

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Concluding comment:

“Safety is business critical”

Understand vulnerabilityEffective barrier managementHigh performing safety culture



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EEOP – Summary of work performed Part 1 – Current practice

- Seven company visits- Assessment through existing reports and documents (more than 350

reports/documents were reviewed)- Interviews of key personnel (80 interviews were conducted)- Questionnaires to vessels and offices – more than 400 persons have

responded- Around 160 observations documented

Part 2 – Improvement areas- Four full-day workshops arranged- More than 40 subject matter experts involved in different

topics/discussions- All observations discussed and validated- Strengths and weaknesses in current set-up discussed- Key improvement areas identified- Recommendations for improvements

Part 3 – Way forward- A platform for future cooperation- Individual company reports - Best practice guidelines produced



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Identified savings potential from EEOP phase-I

Ship Owner controlled at no or low cost About 5% Realized by measures/initiatives from

ship owners Charterer controlled at no or low cost

About 6% May be realized by joint initiatives by

charterers & ship owners Improved communications & clear

roles/procedures Ship Owner controlled, but with some cost

About 5% May be realized by introduction of

agreements with incentives “green” contracts, “Environmental”

contracts

Charterers invited to join Phase 2



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Safeguarding life, property and the environment

www.dnv.com

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