forum no_2_2004

ForumTHE CORPORATE MAGAZINE OF DET NORSKE VERITAS NO.2/2004

Ekofisk:

At the crossroads

Also inside:• Safety first at Teekay• Beyond compliance with

Alyeska• Quality assurance at Tsing Tao• DNV Research celebrates

50 years of innovation

2 DNV FORUM NO. 2/2004

DNV Forum is the corporate magazine of Det Norske Veritas

PUBLISHED BYCorporate Relations andCommunicationsN-1322 Høvik, NorwayTel: +47 67 57 99 00Fax: +47 67 57 91 60

EDITORStuart D. BrewerTel: +47 67 57 85 11Mobile: +47 915 22 [email protected]

ADMINISTRATIONGro HusebyTel. +47 67 57 86 [email protected]

DESIGNDRD DM, Reklame & Design as

PRINTStens Trykkeri

COVER PHOTOCourtesy of ConocoPhillips

No responsibility is accepted by the publishers for statements made by authors, nor for attributable comment.Reproduction permitted with acknowledgement of source.

© Det Norske Veritas 2004

DNV (Det Norske Veritas) is an independent, autonomous Foundationworking to safeguard life, property andthe environment. DNV comprises 300 offices in 100 countries, with 5,800 employees.

VISIT OUR WEBSITE WWW.DNV.COM

MANAGING RISK

3 Editorial:

What does it mean to ‘Manage Risk’?

4 Ekofisk: At the crossroads

7 Cold gas is getting hot

10 DNV Research celebrates

50 years of innovation

13 DNV laboratories - experimenting

with success

16 K Power steps into the safety arena

18 Peter Swift on goal-based standards

21 Beyond compliance with Alyeska

24 Teekay Shipping: Raising the safety bar

27 Quality assurance at Tsing Tao Brewery

30 DNV benefits from growth within Asia

32 News

34 Last Word: How ready is industry today?

35 DNV Worldwide

CONTENTS

3DNV FORUM NO. 2/2004

What does it mean to ‘Manage Risk’?

EDITORIAL

Elisabeth Harstad, chief operating officer of DNV Technology ServicesM“Managing risk” is a statement widely

used to represent the core of all DNVservices. But what does it actually mean?

The new risk realityIn a global and transparent business envi-ronment characterised by an increasedfocus on safety, environmental issues andsocial responsibility, our clients are facinga new risk reality. Industries have beenshaken by accidents and events whichhave demonstrated their vulnerability.Widely publicised events, such as thecollapse of Enron and Arthur Andersenand the severe environmental pollutioncaused by the losses of tankers such asErika and Prestige, have forced compa-nies to take a fresh look at managingrisk.

Yet despite real progress, change doesnot happen overnight. Recently, the acci-dental puncturing of a gas pipe caused amajor explosion on an industrial estatein Belgium, causing fatalities and numer-ous casualties. Events like these have amajor impact on those directly involvedor affected, but at the same time, wealso see a strong increase in concernfrom other stakeholders. In fact, doingbusiness today is under constant scrutinyof legislators, politicians, the media, dedi-cated watchdogs and society at large.

No activity without riskRisk is an inherent part of any activity.And while risk can never be eliminated,it can be controlled as part of the man-agement of any activity. Improving safe-ty does not occur by chance, but is the

result of planned actions and qualifieddecisions throughout the lifecycle ofany activity. Too often, wrong decisionsare the result of wishful thinking ratherthan factual knowledge and accurateassessments including the worst-casescenarios.

Energy sectorThe oil, gas and process industry hasalways faced unique risk managementchallenges. Perhaps more than any otherindustry, identifying risks for oil and gascompanies is far easier than implement-ing the solutions. Consider that whileenergy resources are becoming moredifficult to access, society is becomingless tolerant of risk. The terms “NIMBY”(Not In My Back Yard) or the more ex-treme version “BANANA” (Build AbsolutelyNothing Anywhere Near Anything) arewell known in the US. These trends notonly call for companies to continue tostrengthen and focus their efforts tomanage risks, but build credibility.

As an independent organisation with aglobal presence, DNV is in a good posi-tion to help our clients face this newand complex risk environment in a fast-changing world. The combination ofour extensive technological know-howand our risk-based principles and solu-tions, enables our global network ofclients to develop sound risk manage-ment strategies and appropriate meas-ures to mitigate risk and improve thequality, safety and environmental per-formance of their operations.

Elisabeth Harstad

“Too often,wrongdecisionsare the resultof wishfulthinking...”

T


Ekofisk:

Overcoming a mid-life

As head of the Ekofisk AreaGrowth Project, Bård AtleHovd strongly believes thebest way to increase efficiency is to reduce unin-tended incidents.

When ConocoPhillips began offshoredrilling operations on the Ekofisk fieldin the North Sea in the early 1970s,analysts estimated a 25 year lifetimehorizon for the field. Now that newestimates have added another 30 years,to the life of the field ConocoPhillips isexploring ways to upgrade its agingplatforms without losing productioncapacity.

The American oil company and Ekofisk-operator,ConocoPhillips, along with its licence partners, areinvesting NOK 8.1 billion in the Ekofisk AreaGrowth Project. The objective is to increase therate of oil recovery in a profitable and safe manner.The challenge is how to combine old and newinstallations, parallel to the running production.A total of 6,000 man-years, mostly employed bysubcontractors, will be invested in the project until2005, when the Growth Project is completed.

One key part of the project will be the constructionof a new wellhead platform, which will be connectedto the existing Ekofisk Complex. According toBård Atle Hovd, who is the head of the EkofiskArea Growth Project and a former platform man-ager at Ekofisk, ConocoPhillips brings decades ofoffshore experience to this effort. He notes thatoil has been produced from fixed installations onEkofisk since 1974, and reconstruction and modi-fication processes are continuously on-going onthe field.

Preparing for the futureAs ConocoPhillips started production from theEkofisk II facilities in 1998, it became obvious thatbecause there were limited slots on current instal-lations to drill new wells and the processing andwater separation facilities need to be increased, itsproduction capacity would not be able to satisfythe estimated future production plans. The EkofiskArea Growth project has been conceived to man-age these complex issues.

Hovd says the project has been challenging.“Upgrading offshore modifications is likedemolishing an old house; when you removesomething, you always find something hid-den,” he says. “In addition, both the weatherconditions and maintaining the rapid paceof the project have been a great challenge.”

Yet Hovd remains confident the project willbe completed successfully. “Project manage-ment is about good planning, preparation,and having sufficient information to makethe right decisions. If circumstances requirethat we must revise these decisions, we mustevaluate the consequences before we act.”


crisis

Getting to zeroConocoPhillips has set very ambitious goals forsafety, health and environment, identified bythe by the phrase “Getting to zero”. The com-pany encourages teamwork and building theright attitudes as the key in this effort. The em-phasis on zero tolerance stands like a rock inthe company’s management philosophy.

Hovd says that a great deal of the project’s successis related to the subcontractors’ performance.ConocoPhillips has been very satisfied with thequality of the work delivered by its businesspartners so far.

The success of the project is also linked to thecompany’s efforts to integrate the subcontractorsin the common safety, health, and environ-ment (SHE) policy. Says Hovd: “We concen-trate a lot on safety and see no contradictionsbetween safety and effectiveness. Rather theseissues depend on each other. Thanks to theirvaluable expertise in complex offshore opera-tions, 70 per cent of the subcontractors areNorwegian.”

He continues: “Most of my time is occupied byfollowing up the ‘Getting to zero’ philosophy.We strongly believe the best way to increaseefficiency is to reduce unintended incidents.” �

ConocoPhillips’ Ekofisk field in the North Sea is the first legitimate child of the Norwegian oil age.It might also end up being the oldest one.

Photos: ConocoPhillips


Quality beyond priceThe company is cost-effective and price-conscious, but there are alsoother factors to be considered when making a NOK 8.1 billioninvestment. “We must not only focus on man-hour rates and quotaprices but on what we get back in terms of quality of facilities,resources and expertise used to execute the project,” saysHovd.

When ConocoPhillips and its license partners decided to putanother NOK 8.1 billion into Ekofisk, it was based upon astrong belief in the field’s future profitability. It was also basedupon the fact that the North Sea is one of the safest and mostpredictable areas for major investments worldwide.

ConocoPhillips North Sea Operations accounts for about17 per cent of the ConocoPhillips Group’s total oil and gasproduction, and is ConocoPhillips’ biggest business unit out-side the US. The Ekofisk Area Growth project was not seen asan extremely profitable project at corporate level. But onceagain, background experience has shown that the Ekofisk fieldalways delivers beyond expectations.

Ellen Kongsnes

• Ekofisk Area Growth project is estimatedto cost NOK 8.1 billion and will enable ConocoPhillips to run the Ekofisk fieldmore profitably for another 30 years.

• NOK 4.5 billion has been allocated to the rehabilitation of the existing installations and the building of a new processing platform. The costs of drilling 25 new wells, necessary to make the field more profitable for decades to come, are estimated to be NOK 3.6 billion.

• The Ekofisk field is located in the southern part of the North Sea, southwest of Stavanger and almost 200 miles offshore Norway.

• The field was discovered in 1969, and production began with the modified

jack-up rig “Gulftide” in 1971, and from fixed installations in 1974.

• The Ekofisk Complex consists of 11 platforms, united by bridges. Greater Ekofisk Area consists of about 30 installations.

• In 1994, the Ekofisk licence was extended to 2028 and the work of building Ekofisk II started. A new drilling and wellhead platform came in production in 1996 and a new processing platform was installed in 1997 and put in production in 1998.

• In 1999 the work was initiated to identify future opportunities. The Ekofisk Area Growth project will be completed in 2005.

Photo: Kjetil Alsvik

“Upgrading offshore modificationsis like demolishing an old house; when you remove something, youalways find something hidden.”


Cold gas is getting hot

Worldwide energy demands are growing rapidly,and liquefied natural gas (LNG) is fast becoming a hotcommodity. Rising prices and lower costs are creatinga boom, but the rapid conversion of existing tech-nology to fit this complicated product is neitherstraightforward nor risk free. Competency and practicalexperience from a range of engineering fields isnecessary to make the transition safe. �

An artist's rendition of anLNG terminal; In connectionwith the offshore installations set to be built, manufacturersare looking at a number ofconcepts, floating and fixed,both in steel and concrete.

N


Natural gas was long considered an unwanted by-product of oil exploration, symbolised by the flaresthat once illuminated oil platforms and terminals.Now the energy industry has a different view.Encouraged by lower production and transporta-tion costs, demand for environmentally friendlypower, to say nothing of regulations prohibitingburn-off, natural gas is in demand.

LNGMuch of the world’s resources of natural gas aretypically located far from the major energy mar-kets, such as the United States of America, Japanand Europe. In order to transport the gas effectively,it’s cooled to approximately minus 160° Celsius untilit takes the form of a liquid, reducing the gas’ volumeby about 600 times in the process. This liquefiednatural gas (LNG) is then shipped to the customers.Before it can be used, however, it must be offloadedfrom the ships and returned to gas form forpipeline transmission at a receiving terminal, alsocalled a re-gasification terminal.

Offshore and out of sightTo cope with increased demand for imported LNG,around 40 new terminals or expansions to existingLNG receiving terminals are planned in NorthAmerica alone. Many of these new terminals will belocated offshore.

“There are many reasons for having the installa-tions offshore, not least the public concern forsafety and the dislike of large industrial structuresin their vicinity,” says Pål Jahre Nilsen, global gasmanager for DNV Technology Services. “Anotherreason is the lack of favourable sites and the difficultand time-consuming approval process to get a facilityup and running. The process of approval is typicallyeasier for offshore installations. But while theapproval is easier, other things become more diffi-cult when taking this technology offshore.”

New and existing technologyTaking a land based technology offshore presents awhole new set of issues that must be addressed beforea safe and regulatory compliant installation can bebuilt and operated. A major challenge is combiningexisting and novel technology safely.

“When moving land based storage solutions andgas processing plants offshore, the design musttake into account the marine environment and be

made more compact due to the restricted space,”says Conn Fagan, senior principal engineer in DNVTechnology Services. “Operating in an exposed off-shore environment creates relative movement be-tween gas carriers and the offshore terminal, whetherthese are fixed or floating, and that puts a strainon the existing transfer technology. In some casesnew technology may need to be qualified. At thesame time, technology used in maritime transportof LNG is being adapted to offshore terminal de-sign. This includes both floating hull design anddesign of the LNG containment systems. It is crucialto identify and address the gap between these existingtechnologies and the novel application of them tooffshore terminals.”

Not straightforwardDNV has a great deal of experience within all therelevant areas of these existing technologies, fromuse of concrete offshore to design of LNG contain-ment systems.

“The new LNG production process combines tech-nology and competency from three areas; tradi-tional land based LNG terminals, maritime trans-port of LNG, and offshore oil/gas structures. Thisis not easy to do. There are key interface issues thatmust be resolved, and the industry must take intoaccount all the novel operational challenges,” saysNilsen.

Staying aheadAs part of efforts to remain in the forefront of newtechnology and new applications, DNV engages inboth internal and external research into these areas.Current work includes evaluation of sloshing in


THE LNG BOOM IN NUMBERSThe continental United States importedapproximately 4.8 MTA of LNG in 2002, accounting for 4 percent of world LNGtrade. In 2003 the import had increased to 10 MTA, about two percent of U.S. natural gas consumption. U.S. LNG importsare projected to increase to more than46 MTA in 2010.

Global LNG liquefaction capacity is expected to increase from 139 MTA peryear in 2003 to 197 MTA per year in 2007,based on facilities currently under construction.

THE LNG BOOM INTERNATIONALLYIn addition to expansions by current LNG exporters, three countries – Egypt, Norway,and Russia – are poised to become LNG exporting countries, as they are currentlyconstructing their first LNG liquefactio plants.

At least seven additional countries – Angola, Bolivia, Equatorial Guinea, Iran,Peru, Venezuela, and Yemen – are in theplanning stages for their first LNG liquefaction plants.

In addition to expansions by existing importers, three countries – China, India,and the United Kingdom – are poised tobecome LNG importing countries, as theyare currently constructing new regasification terminals.

Bahamas, Jamaica, Indonesia, Mexico, the Netherlands, Italy, New Zealand,Singapore and the Philippines – are in theplanning stages for their first regasifica-tion terminals.

containment tanks, venting and relief fromLNG storage, lifecycle assessment of contain-ment systems, and qualification of novel LNGtransfer systems.

“Our engagement with all the major offshoreconcrete structures in the North Sea, our expe-rience with the development of the variouscontainment system designs in use today, to-gether with our access to in-house competencein key areas such as risk assessment and tech-nology qualification, give us an advantage whenapproaching offshore gas terminals. We arealso in contact with regulatory authorities andclosely follow their work in developing a regu-latory framework for these new concepts,” saysFagan.

Offshore Technical Guidance from DNVIn May 2004 DNV issued the Offshore TechnicalGuidance “Verification, Certification and Classifi-cation of Gas Export and Receiving Terminals.”It describes various approaches to the Verificationof gas development projects, including the servicesof Classification, Certification and Qualificationof Novel Technology.

“By combining DNV’s breadth of competencyand experience with existing technology, ourresearch and knowledge on new technologyqualification, DNV is in a unique position to as-sist clients in identifying the novel challengesand reaching their economic and safety goals,”says Nilsen.

Anders Øvreberg

Conn Fagan, senior principalengineer in DNV TechnologyServices (left), and Pål JahreNilsen, global gas manager forDNV Technology Services,offer a comprehensive packageof services to the LNG industry.

5I


Fifty years ago, DNV took a significantand pioneering step by establishing adedicated Research Department. Today,DNV is internationally recognised for itsexpertise in a broad range of industries.

In 1951, professor and vice principal of theNorwegian Technical University Georg Vedelerwas appointed managing director in DNV. Hisvision was to build safer ships in a more prof-itable way. To do so, he introduced a scientificapproach to ship construction.

“In the post war period, an era characterisedby a rapid increase in sea trade and the grow-ing size and complexity of ships, the industryrecognised that the traditional, empiricallybased Class rules must yield to more scientificmethods founded on state-of-the-art research.For Vedeler, managing these changes effectivelyrequired a fresh approach. “We have no choice,”he said. “We have to do research.”

In 1952, Vedeler hired his former student EgilAbrahamsen, who after a short time estab-lished DNV Research. “At the time, ship classi-fication in DNV was entirely based on Lloydsrules; and the 1939 rules hadn't been changedsince 1919,”Abrahamsen recalls. For him thechallenge, and the key to the future success ofthe project, was to develop new rules based onscientific and technological knowledge. “Theimprovement of technology and understand-ing of engineering was limited at that time inall classification societies,” he says. “That gaveus tremendous opportunities when we startedwith the development of rules based on scien-tific terms.”

LNG technologyOver time, the DNV’s Research departmentgrew to 300 dedicated employees. Indeed,many of today’s products in DNV’s portfoliohave their background from the Research depart-ment, such as LNG technology. “We assigned aresearch team to work with a shipowner, whowas very interested in transport of liquefiednatural gas (LNG). We were asked to determinethe feasibility of transporting LNG onboard avessel at minus 161° C,” says Abrahamsen.

Various types of tanks were developed and tested.At the same time, a vessel was built with aspherical tank at a Norwegian yard. It was deliv-ered in 1960-61. “We did a tremendous amountof work on that tank. The ship was successful andoperated for many years. That was the first setof spherical tanks, a concept later used forLNG which is a technology based on our re-search,” says Abrahamsen.

The material department had extensive knowl-edge of materials technology. With the help ofthe computational programme SESAM (anothersuccessful product of DNV Research) the re-search team was able to design a solution forthe integration of the tank and the hull.

DNV Research celebrates

50 years


“The US Coast Guard insisted that a secondbarrier should be placed around LNG tanks. Ipersonally went over to them and presentedour design based on risk analysis. Eventually,we convinced them to adapt to our thinking,”he says. Abrahamsen notes that this project wasthe first risk based analyses ever completed inthe shipping industry.

Another result of DNV’s research activity isDNV Petroleum Services. DNV’s first fuel test-ing programme started in 1980 on the basis offindings from a research project completed inthe late 1970s. Today, DNV Petroleum Servicesoffers 24 hour time zone fuel testing throughits international network of laboratories andregional offices. It is a recognised name in ma-rine fuel management with a global marketshare in excess of 75 percent in contractedFuel Quality Testing.

The quest for diversificationSupported by DNV’s competence and expert-ise in ship technology, the company began todiversify in the 1970s, both geographically andin its technological disciplines. The first stepwas to build on its existing technical platformand launch services to help clients in thebooming North Sea oil and gas industry. Thiswas a high-risk business in which safeguardinglife, property and the environment was – andremains – a priority issue. In turn, the focus of

DNV’s Research shifted to the offshore arena,exploiting its synergies with the maritime in-dustry.

In the 1990s, DNV continued to expand itsservices into new markets, with DNV Researchtaking a strategic role in building the necessarycompetence and basis for the new services.“We believe our research activities will help thenew services become core business areas in thefuture,” says Carl Arne Carlsen. Since November2003, he has been head of DNV Research. Heis now focusing on five main programmes.

Shaping tomorrow’s DNVDNV Research’s transportation programmeconsiders the total value chain of transportinggoods on land and sea. DNV personnel considerboth the business concept and the technicalchallenges and a prime focus is on how tomake shipping more effective and attractive inthe transportation chain. To succeed, innova-tive ship design and construction methodsmust be developed, helping build ships thatare faster, more reliable, safer and environ-mentally friendly.

“We are actively working towards such develop-ment,” he says, “but as a risk-based solution notprescriptive classification rules,” he says. �

After building up DNV's research department, Egil Abrahamsen becamemanaging director of DNV in 1966. Here he is seen accompanying PresidentFrancois Mitterand and H.M. King Olav of Norway visiting DNV in 1984.

of innovation


“DNV Research’s role is to build strategic competencefor DNV as a whole, and to carry out radical researchand innovation in new areas. This is research with ahigh-risk of failure, but also the potential for substantial reward,” says Carl Arne Carlsen, head of DNV Research.

Driven by the risk of scarcity of hydrocarbon-based energy, andthe growing demand for a cleaner environment and for sus-tainable societies, DNV is now looking for new types of energysources and carriers. DNV Research is working to prepare thecompany for helping clients meet this challenge onshore, off-shore and at sea. Developments include natural-gas exploitation,reduction of greenhouse gases by CO2 capture and storage,infrastructure solutions based on natural gas- and hydrogen,and fuel cells to generate electricity, as well as renewable energysources.

New lightweight and multi-functional materials, and surfaceprotections based on nano-technology, are to be studied in anew research programme. Materials technology has alwaysbeen a core competence area for DNV, and the company iscommitted to ensuring strategic competence for future devel-opments.

Technology is playing a larger role in the development of newproduct markets for the food and health industries. The risksassociated with these are only now being understood and handled.DNV may play an important role in coping with risk in selectedbiological and life sciences, such as the food sector, diseasecontrol, high-risk bio-laboratories, and biological aspects ofthe environment. “We have begun to build strategic competencein these areas, and to support the development of relevantservices,” Carlsen says.

Technology in contextIn Carlsen’s view, technological risk management must increas-ingly be seen in a broader organisational, human and socialcontext. Successful business is dependent on risk managementaccording to the context of operations. “Globalisation, demandfor sustainability and focus on security are issues that make de-mands on our understanding of both technological develop-ment and human behaviour,” he says.

According to Carl Arne Carlsen all these areas are recognisedas genuine aspects of concerns for future DNV research projects.

Eva Halvorsen

D


DNV has conducted laboratorytests to chart the sloshingforces involved in partly filledmembrane tanks. Seen here,from left, laboratory techni-cians Morten Andersen, KnutHansen and Sigbjørn Reinås atwork in the test hall at DNV’sheadquarters in Oslo, Norway

DNV laboratories– experimenting

with successThe DNV laboratories are a valuable toolused by DNV in two vital ways: verifyingtheoretical models in full-scale tests andto aid in failure investigations.

DNV has a broad range of laboratories. These facilitieshave given DNV hands on experience of components andfailure modes which have proven to be of great value toDNV’s customers and to DNV’s efforts to classifying shipsand offshore units, create standards, and recommend effectivepractices and classification rules. “These resources add valueto our range of other services and have provided a uniqueknowledge basis for a lot of the other work we do,” statesElisabeth Tørstad, the head of the DNV deepwater tech-nology and technology qualification. �


Research into LNG tanksA particular successful example of how the labora-tories are used is the recent slosh testing andanalyses of LNG membrane tanks carried outfor Exxon Mobile. Sloshing in LNG tanks hasgained increasing attention lately. This ismainly caused by developments in the LNGmarket, changes in the design and operationof LNG ships and an increasing interest infloating gas field exploitation.

To study sloshing loads in partially filled LNGtanks, irregular sloshing experiments havebeen conducted for head and beam seas fordifferent filling levels and sea severities. A1/20 scale model of a tank from a 138,000 m3

membrane type LNG ship was used for thetests. Measurements have been conducted usingpressure transducers and pressure transducersmounted in clusters.

Step-by-step procedureThe issue of sloshing in partially filled tanks isrelevant for spot trading and the offshore load-ing/offloading of LNG ships as well as forFPSOs with LNG capacity. DNV has developeda step-by-step experimental procedure to deter-mine sloshing loads for structural analysis of theinsulation system and tank support structure.Of key importance for a reliable evaluation isthe step-by-step approach, putting emphasison an accurate treatment of every step. Thismeans careful modelling of operational andenvironmental conditions, accurate ship motioncalculations, a well-defined procedure foridentifying design sea states, a proper experi-mental set-up and an accurate treatment of thestatistics involved in every step in order to deter-mine reliable and realistic design sloshing pres-sures.

Valuable laboratory testing“Much of our work is mainly based on the cali-bration of design formulations performedthrough testing,” says Tørstad. “Several ‘cut-ting edge’ projects and services are based onthe combination of testing/practical knowl-edge and theoretical expertise.” She mentionsseveral examples where laboratory testing hasbeen valuable, including the development ofmethodology for fatigue analyses of FPSOs.“Without this project, sufficient fatigue life ofthe Kizomba A and B could not have been doc-umented,” she says.

The sand management services – a recent suc-cessful cooperation between DNV Softwareand DNV Consulting – is based on work com-pleted in the process laboratories. The GarnWest project for Shell is another project whereactual confirmation of design input throughtesting has been essential.

Failure investigation to find the answerThrough advanced laboratory testing and fail-ure investigation, DNV also obtains valuableknowledge about failure modes and mecha-nisms with regard to how things fail and why.Over the years, DNV’s laboratory has obtainedworldwide recognition for its failure investiga-tions, covering a broad range of issues, frommajor breakdowns to minor damage to indi-vidual components.

“The main goal for a failure investigation is toprevent new failures, increase safety and opti-mise operations,” says Trude Helgesen, headof section.

Failure investigation is not a clearly definedterm, but it typically includes the collection ofdata and information, visual examinations,photo documentation and material verifica-tion. DNV has acquired extensive experienceand knowledge through working with a widerange of clients and services. This has also giventhe company broad knowledge of the industryand the regulators. A combination of DNV’srisk management expertise with technicalknowledge has made this a highly valued service.

“Due to the failure aspect, a major part of thisservice is contract work and very often of aconfidential nature,” says Helgesen.

Borealis – a close relationshipOlaf Andersen, chief engineer in materialtechnology responsible for all of Borealis’s me-chanical equipment, has had a long, close rela-tionship with DNV as a user of DNV services.With a degree in physical metallurgy from theNorwegian Institute of Technology (now theUniversity of Science and Technology) in 1970and two years spent as a scientific and researchassistant to Almar Ness, he came to StavangerStaal in 1972. There he learned about metal-lurgy the hard way as quality control manager– and also helped create some alloy develop-ments himself.

“The laboratory resourcesadd value to DNV’s range of services,” says ElisabethTørstad, the head of DNVdeepwater technology andtechnology qualification.

Borealis-guru Olaf Andersen:“The DNV-laboratories haveexpertise and equipment,and we use them whereverthis is practically possibleand sensible.”

“The main goal for a failureinvestigation is to preventnew failures, increase safetyand optimise operations,”says head of section TrudeHelgesen.


“Five years here was an extremely goodschool,” he says. So when petrochemicals cameto Norway, he jumped on this bandwagon andstarted to work for Statoil in 1977. WhenBorealis was established in 1994, he had beenchief engineer responsible for material tech-nology at Statoil headquarters since 1991. In1998, he started to work for Borealis, where henow spends half his time on group issues andthe other half troubleshooting at Borealis’facilities worldwide.

Expertise and equipment“We’ve used DNV to develop our risk-basedinspection system – and we use DNV to inspectdamage. The DNV laboratories have a reasonableamount of staff and are flexible and able toagree to and deliver an inspection reasonablyquickly. They have expertise and equipmentand we use them wherever this is practicallypossible and sensible.”

DNV has supplied NDT services to the facilitiesat Bamle in Norway for the past 30 years.Borealis has now also entered into a frame-work agreement with DNV regarding certifica-tion throughout Borealis. Andersen also pointsout vibration studies of structures and pipelinescarried out by Borealis and DNV in collabora-tion, supported by funds from the ResearchCouncil of Norway. Several surveys have alsobeen conducted relating to corrosion in steam

systems, and dynamic steam boiler simulationshave been carried out at one of the plants.

Borealis currently has 5,000 employees. Statoilowns 50 percent of its shares, while ÖMV inAustria and IPIC – a fully owned subsidiary ofAdnoc, Abu Dhabi’s national oil company - own25 percent each. Borealis is a major manufac-turer of pipe materials, high-voltage insula-tion, engineering applications and plastics forcars and household articles. The company hasfacilities in Norway, Sweden, Finland, Germany,Austria, Italy, Abu Dhabi, China and the USA.

Harald Bråthen

THE DNV LABORATORIES• Structural laboratories in Oslo, Norway and Singapore.

• Metallurgical/failure investigation laboratories in Oslo and Bergen, Norway, and in Singapore.

• Workshop/test facilities in Kuala Lumpur, Malaysia, and in Oslo.

• A corrosion laboratory in Bergen.

• A laboratory for certifying electrical equipment – to a large degree used for maritime equipment – in Oslo.

• A process laboratory in Oslo.

• Fuel testing laboratories: in Singapore, Fujairah, United Arab Emirates,New Jersey, USA, Algeciras, Spain, Rotterdam, the Netherlands, and Oslo.

Practically every field of technical activity is represented among thefailure investigation clients.However, most of the activities are related to oil companies, suppliers to the oil industry, process and mechanical industry, yards and ship owners.

U


K POWER is a joint industry projectbetween BP and the Korean companySK Corporation for the constructionof a US$ 614 million LNG fired powerplant in the Gwangyang area on thesouth coast of Korea. The turn-keycontractor delivering the powerplant for the K-Power enterprise isanother Korean giant company –Daelim.

BP GLOBAL POWER signals part ofBP’s efforts to move from being anoil & gas company to becoming anintegrated energy company. BPGlobal Power is in the fastest growingbusiness segment (Gas, Power &Renewables) for BP with a projectedrapid international growth. BPGlobal Power is a minority share-holder in K Power with 35 per cent

It is always difficult to achieve a consistent and high safetystandard during any major project. But when the projectinvolves owners and stakeholders with different corporateand national cultures, success can be elusive. Although facedwith these challenges, the construction effort of K Power’sLNG plant in Korea is proceeding smoothly, and stands as agood model for others to follow.

Using simple, practical and down-to-earth safety communication, K Powerhas recorded an outstanding healthand safety record: Zero accidents with720,000 man hours so far.

Critical to their approach has beenthe creation of an innovative SafetyExperience Training Centre; a dedi-cated area designed for safety induc-tion which doubles up as the site entrypoint. Walking through the centre at thestart of their shift, all project employeesare escorted by a site safety supervisorand shown visual displays on good andpoor practice.

One way to safety At the centre, each new individual isinitially inducted into the safety stan-dards required on site such as personalprotective equipment requirements, sitesafety rules for a broad range of condi-tions, equipment and tasks, includingworking at height use of scaffolding,lifting, electrical connections and weld-ing practices.

“The emphasis is on clearly and visuallydemonstrating what is and what is notacceptable behaviour and practice,”says Jin Han Baek, the site safety man-ager who has worked on the safety pre-cautions since the start of the project.

“Entry and exit to the site is alwaysthrough this safety area, which is pro-viding constant re-enforcement of safetyissues,”

Ensuring buy-inBP Global Power's HSSE managerDennis O'Leary explains: “From theoutset of the K-Power development,the approach has been one of inclu-sion, of respecting the diversity andcontribution of each of the partners.In BP, safety is seen as critical to busi-ness success and in this case we are de-lighted to see a best practice safety con-cept originating with Daelim. It helpsus in BP to realize that just because weset out to be a leader in HSSE, we don’talways have the best ideas!

“The whole process is consistent withBP’s behavioural approach; visibly anddemonstrably helping people to under-stand what could go wrong. It providesa clear and powerful demonstration ofour management’s commitment to HSSE.It is an approach that could easily bereplicated at other BP sites or any otherjoint venture projects where a commonframework is necessary to accommodatea diversity of cultures,” says O’Leary.

Daelim's site manager Kyung Soo Han (left)and Jin Han Baek, the site’s HSSE manager,are both confident that their approach will ensure zero accidents all the way throughthe construction period.

Step into the Safety Arena


Overcoming difficultiesThe difficulties faced by BP GlobalPower in undertaking the developmentof the project HSSE policy and manage-ment framework were numerous. After alate entry of BP into the enterprise, theHSSE development work was undertakensome four months after project com-mencement – a particular challenge asthere were huge organisational differ-ences between the three participatingcompanies.

The HSSE policy also had to be designedto manage cultural and language chal-lenges within a very tight time-frame fordelivery of the policy. Indeed, the frame-work had to be dealt with in a flexiblemanner but yet implemented efficientlyand consistently.

Through a facilitated three day work-shop, with senior representatives partici-pating from each organisation, all aspectsassociated with creating the safety frame-work were discussed and best practiceswere established. This inclusive approachmeant the companies now share owner-ship of process and results both individ-ually and jointly.

“In similar projects, this type of activitytraditionally has taken weeks or monthsto complete. Based on BP experience,

policy and systems are often not fullyowned by the participating companies,”says O’Leary.

Earning a good reputation“The safety work undertaken at the sitegoes beyond compliance with nationaland local requirements, causing some towonder if the effort represented an un-necessary cost,” says Harry C.Y. Heo, whois BP’s HSSE manager for the K Powerproject in Korea. “But there is no doubtin my mind that putting safety first paysoff in every sense of the word, includingthe reinforcement of the company’sbrand. In gaining an unprecedentedgood safety record, which is a goal in it-self, we also demonstrate that we are acompany which takes people’s safetyseriously.”

For Daelim, managing complex safetyissues at huge construction sites both in-ternationally and in Korea is part ofbuilding the company’s good reputa-tion. But as site manager Kyung Soo Hanproudly admits: “Daelim has the bestsafety record in Korea, and this site hasthe best safety record in Daelim.”

Both Han and Baek believe this has todo with the employees’ commitment tobest practice. “The employees think forthemselves and actually take the safety

concerns to their heart. It is a point ofpride, and with this emotional aspect inplace, combined with clear communica-tion and a good framework ensuring thephysical safety aspects, we achieve resultsthat we are proud of. Working with BPwe have also improved the way we seesafety in broader terms,” says Baek.

Sharing the experience throughout BPO’Leary is impressed by what site man-ager Kyung Soo Han and Baek, theHSSE manager at the site, have achievedand says it is a powerful example of suc-cessful implementation of innovativesafety work. “I am confident that this ap-proach to project management can beapplied elsewhere and will contribute tosustainable HSSE performance in manyBP projects. It is repeatable across our$12 billion annual capex portfolio.”

The Safety Experience Training Centreconcept was recently shared at anExploration and Production EmergingAreas HSE Workshop, attended by HSErepresentatives from BP’s E&P segmentfrom across the world. There is also anaction plan in place to share GlobalPower’s experiences with senior repre-sentatives from BP’s Azerbaijan andAlgerian business units.

Kristian Lindøe

Daelim has developed a method for communicating what are safeand what are poor working practices on their construction site,which was considered as "best-in-class" in a recent audit by DNV.


Towards common rulesIn a period of increasing international maritimeregulations, the relationship between the IMO,classification societies and shipowners hasbecome increasingly complex. An erosion ofthe trust placed in the industry by regulatorsand end-users has lead to calls from some inthe maritime industry to establish goal-basedstandards – common rules with clearly statedgoals for safety reliability and durability.

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We met Peter Swift the managing director ofINTERTANKO (International Association of Inde-pendent Tanker Owners) to hear his views on thedevelopment of goal-based standards, and also oninitiatives from class to harmonise structural rulesfor both tankers and bulk carriers.

According to Swift, INTERTANKO has supportedthe adoption of common standards across classsocieties and is encouraged by the progress of theinitiative. “Three years ago, INTERTANKO pro-duced an aide memoire in cooperation with OCIMFto define areas of concern with respect to struc-tural matters, including minimum scantlings,corrosion allowances, and various inconsistenciesbetween rules and approaches,” he says. “Today,we feel the same approach can apply to other areas,such as maintenance and machinery.”

INTERTANKO also initiated a discussion withshipbuilders on newbuilding standards. This wastaken up by the Round Table of internationalshipping associations (INTERTANKO, Intercargo,ICS and BIMCO) in discussions with leadingAsian shipbuilders’ associations in Singapore, twoyears ago. Those talks touched on similar issuesrelated to concepts behind the common rulesand goal-based standards.

“The goal-based standards are very much sup-ported by INTERTANKO with the idea that theregulator should set rules in accordance with so-cieties’ expectations,” says Swift. “We are familiarwith the challenges of ensuring quality. Shipsshould be robust and designed for operation overa specified minimum number of years in certainenvironmental conditions. At the same time, it isalso important that vessels should be properlymaintained, managed and operated by well-trained crews.”

Leadership through cooperationSwift believes it is the IMO’s responsibility to es-tablish goal-based standards in cooperation withclass societies and shipowners. “Harmonised rulesand regulations should then be established bythose industry bodies qualified and equipped toachieve these standards,” he says, “but at the sametime, we need to communicate that these regula-tions will also need be subject to continued devel-opment. The process should be flexible enoughto allow for alternatives which will be guided by acombination of regulation and self-regulation de-signed to achieve our objectives.”

So far, discussions have revolved around structuralstandards, but soon, the same approach will applyto everything from machinery to maintenance.Swift says that goal-based standards enjoy wide-spread industry support and is encouraged by theprocess. “It is important that we continue to getinternational support for this standardisationprocess,” he says. “Similarly, we believe it is impor-tant to ensure that we avoid situations where newstandards are put in place in reaction tohigh-profile incidents. Over time, thegoal-based standards should incorpo-rate an evaluation process which wouldallow governing bodies to amend stan-dards as needed in an orderly andthoughtful manner.”

Swift is quick to note that setting standards re-mains the responsibility of the IMO and relatedadministrations. “The IMO is responsive andfunctioning in a way most bodies expect,” he says,“but we feel that standards should be set by theflag administrations in a process that involves theindustry in discussions or forums, organised bythe IMO. We have faith in the IMO, and its abilityto recognise the need for practical solutions withappropriate input from industry. If society expectthings to move quickly, then we all need to movequickly. There is no excuse for foot-dragging.” �

Peter Swift, managing director of INTERTANKO,believes that the new regulatory framework for newbuildings will raise the standards of shipbuilding.

“It is important to win the support of all class societies”

Photo: Masterfile/SCANPIX


Common rulesSwift says that it is wrong to compete on steelweights or standards in the design and construc-tion of tankers and dry-bulk carriers. “We believedeveloping common rules is positive and are notconcerned with fears that common standards willerode competition,” he says. “I know there thosewho remain concerned that common rules willstifle competitive spirit, but we share their hopethat class societies will continue to compete.However, we believe they should compete on thequality of their services, not standards.”

By removing some of the competitive elementsthat have existed in the past, Swift hopes that theindustry will end up with more robust ships de-signed and built with margins appropriate to theservice of the vessel. “We also believe it is impor-tant to win the support of all class societies,” hesays. “And once we establish common rules, wefeel it is essential to open a dialogue about theirfuture development with all interested parties.”

The head of INTERTANKO also noted a fewobservations. He explains, “Having establishedcommon rules, we need to think about their furtherdevelopment. We all recognise that historically,class rules changed because of experience, withindividual societies taking these changes throughtheir technical committees and other mechanisms.They had individual experience maybe with fatigue,corrosion rates and such but the feedback mech-anism was often limited to the particular society.We don’t know yet what the sharing mechanism isgoing to be for that feedback in the future, but itis important we find a workable mechanism forsharing experience. Ideally this would extend to in-volve shipowners and shipbuilders more than inthe past. We would be disturbed if one class society,or a group of societies, were gathering knowledgeand then having trouble sharing it in a develop-ment stage of the common rules.”

He adds, “We do believe very firmly that it is im-portant that class (and hopefully in a good dialoguewith industry) talks about how we have learnedfrom experience and how the rules might beamended once they have been established. It’simportant that we all think about how we’re going

to take that field experience and share it – whichmay be a little difficult for some class societies – in ameaningful way that will have comprehensivebuy-in.”

As an objective observer, Swift also questions whatwill be the future incentive for the larger class so-cieties to have advanced research programmes,and how will they sustain these, when frequentlythey will be applied to a set of common rules.

“This is a challenge the class societies have tothink about more than the industry, but we wellrecognise the value of research in the past in theindividual societies. So we would be disturbed if itdisappeared totally,” he says.

And the future?“We certainly see that over time we should belooking at machinery, equipment and systems ina similar fashion to the way we have looked atstructures. We accept likewise that we should betalking about establishing standards for mainte-nance and operation,” Swift says.

While INTERTANKO sees a lot of support for thecommon rules, Swift openly admits that therehasn’t been quite as much consultation as hewould have liked to have seen within the industry.“It’s a difficult process and we realise that there’sa desire to push on. But we need to see the wholepackage. We will want to know, for instance, moreabout what buckling methodology has been ap-plied to make sure it’s one we’re happy with. Wewill certainly want to talk about coating stan-dards. Those are the kind of things that we haveyet to talk about,” he says.

Swift concludes, “We will want to understand howsensitive the end product of the common rules is,for example on scantlings, and to changes in anyassumptions on future goal-based standards. Thatwill be part of our input to the planned consulta-tion and we look forward to that now that therules are about to appear. To achieve the year-endtarget of publishing the common rules, which wesupport, we recognise that there is a very, verybusy period ahead.”

“Class should compete on the qualityof their services, not standards”

Stuart D. Brewer


From challenge to excellence

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“My goal is simple, yet ambitious. I wantAlyeska Pipeline Service Company to be thebest-run pipeline in the world,” says DavidWight, president and CEO of Alyeska.

Today it is possible to believe in such ambitions. 2003 was thebest year ever for Alyeska in terms of service, safety and financial re-sults. However, it was just three years ago that DNV raised some sig-nificant concerns about the company’s management systems.Indeed, one DNV analyst wrote: “There is a significant gap betweenAlyeska’s formal business processes and how the work is actuallycommitted.” At that time, the company’s present ambitions wouldhave been unrealistic. �


“I remember how challenging it was.” says Dan Hisey,the chief operating officer responsible for imple-menting the resulting recommendations. “DNVdid an excellent job. These were hard hittingstatements, but it was an eye-opener. It is my beliefthat Alyeska would not be where it is today if whathas been done in the past few years had been leftundone.”

Answered yes, but…Alyeska, named after an Aleut word meaningmainland, operate the Trans Alaska Pipeline System,a 1,300-kilometre (800-mile) long and 120-centimetre(48-inch) diameter steel pipeline crossing the entiremainland of the huge state of Alaska. In 2004, aboutone million barrels a day are brought from PrudhoeBay in the north of Alaska, to the Port of Valdez,the northernmost ice-free port in the UnitedStates, located near Prince William Sound onAlaska’s southern coast. On its way, the pipelinecrosses some of the world’s most sensitive environ-mental areas under the watchful eyes of regula-tors and special interest groups.

DNV’s original task was to act as as an externalthird party to verify the capability and effective-ness of Alyeska’s management system in ensuringcompliance with the requirements laid out by theFederal Grant, State Lease and all relevant lawsand regulations. After operating the pipeline foralmost 30 years since 1974, Alyeska had to seekanother 30-year right-of-way in 2004.

While the DNV report concluded that thepipeline system – on a day-to-day basis – met theright-of-way obligations, the obligations were metthrough the knowledge and extraordinary effortsof Alyeska’s personnel rather than through thestrength of its management system. The conclu-sions reached by the DNV report were tough, butAlyeska recognized that action had to be taken.

Behavioural and cultural changes“In 2001, our existing compliance managementsystems had served their intended purpose. Thetime had come to improve them,” says Hisey. “Wehad to address root causes rather than just fixsymptoms.”

DNV had used strong words in the technical re-port. But instead of jumping into the trenches todefend its existing system, Alyeska took a positiveand creative approach. The COO, being responsi-ble for implementing the recommendations, usedeven stronger words himself: “It was easier to startwhen we had so many challenges. We recognisedthat the path would not be easy or short. The transi-tion to new systems would require the creation ofa new ways of conducting business as well as be-havioural and cultural changes.”

To stress the relevance of the concerns raised byDNV, some of Hisey’s management colleagues usestatements like “an unhealthy culture” and “silo-thinking” when describing the past.

New management systemWhere others might have had a defensive approach,Alyeska took a positive one. They established aSystem Renewal project to overhaul their entiremanagement system, redefine how business isconducted, and facilitate behavioural and culturalchanges throughout the organisation. The projectwas headed by Kathleen O’Connell, aided by acompetent and motivated team. The access tosenior management in general, and to Hisey inparticular, was visible and positive.

“Our mandate has not only been to address theDNV management system findings, but to go be-yond those aspects required for compliance andimprove the overall efficiency and effectiveness ofconducting business. The overall objective has

David Wight, Dan Hisey, Kathleen O’Connell, chief executive officer chief operating officer project manager


been to deliver the strategic objective – replace themanagement system, improve business processes,and align process measures to deliver results.We’ve delivered the objective by redesigning themajor business processes using a combination ofproject team members, users, and customers anda well-defined and consistent methodology. We builtthe management system one business process at atime” explains O’Connell.

“They won the people,” says Earnest Maxwell,Alyeska’s strategic planning director, referring tothe project headed by O’Connell. “A directionwas set, and we kept to that direction. Our ambi-tion is to be the best-run pipeline in the world,”he repeats. “Today a new management system isin place, and our staff has re-discovered how allour working processes are linked to each other.We are no longer working against each other as900 individuals. We are involving each other andworking closer together in a new Alyeska.”

Change the futureSeveral managers underlined that it was previouslyhard to understand the information flow withinthe multiple management systems in place. TheSystem Renewal process was an eye-opener. Inputsand outputs of each business process wereanalysed - how they were integrated and how eachworking process was influenced by others.

“DNV helped us understand the magnitude ofwhat needed to be done and shared their experi-ences with other companies who had similar is-sues,” says Hisey. DNV entered as an independentthird party. No one could question their integrity,and the timing was perfect. We had to take action.However DNV directed us away from the symp-toms and towards the root causes, allowing us toformulate a much more robust improvementplan.”

The structure of the project was important. Anoverall framework was established. A systematicmethodology was developed and used. Good usewas made of appropriate technology to hold andcommunicate system information. Users and cus-tomers of the business processes were involved inthe improvement and roll-out, while the projectteam was not allowed to falter.

“Everyone involved in our company has beenactive and had a positive approach to changingthe future for Alyeska,” says Hisey. “We have morefocus on our core activity - to bring a million bar-rels of oil through the huge state of Alaska eachsingle day. The goal is still the same, but we aredoing the job with fewer people, more motivated,focused and collaborating people, trusting a newmanagement system - and all this with a greaterfocus and better results when it comes to safetyand reliability than before.”

Per Wiggo Richardsen

ALYESKA IN BRIEF:

Headquarters: Anchorage, Alaska.

Dimensions: 1,300 km pipeline, 120 cm diameter.

From and to: Prudhoe Bay to the Port of Valdez, crossing mainland Alaska.Peak

transportation: 2.1 million barrels per day – 1988.Today’s

transportation: 1 million barrels per day.

Speed: One barrel delivered at the north end will reach the south end nine days later

Owners: BP, ConocoPhillips, ExxonMobil, Unocal, Koch

Earnest Maxwell,strategic planning director

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Raising the safety bar

A FIRST FOR TEEKAY AND DNV

DNV has issued the world’s firstCompetence Management Systemcertificate to Teekay Shipping.

DNV has announced that it has issued a statement of compliance toTeekay Shipping for its competencemanagement system. The standardused is the DNV SeaSkill Standardfor Certification of CompetenceManagement Systems.

This is a unique standard in the maritime world and helps organi-sations put in place a certifiedsystem to develop and managecompetence. It is expected to become the standard-bearer ofcompetence management systemsin the maritime sector. DNV is theonly class society to offer such certification.

The new standard will assist organi-sations that place competencemanagement on their list of priorities. It sets the bar high enoughto ensure continuous improvementin competence management, withregular audits of both on-shore systems and ships, and takes into account both the business goals ofan organisation and statutory requirements.

“This is DNV’s contribution to makingthe maritime industry look beyondcompliance, when it comes to com-petence,” says Tor E. Svensen, chiefoperating officer of DNV Maritime.“The STCW Convention was a wel-come step in the right direction. At the same time, the best companiesare already looking beyond satisfyingminimum requirements and focussingon competence as a strategic tool.We at DNV wish to be at the fore-front of this development. OurCompetence System Standard andthe accompanying certification willassist such companies to attain best-in-class status.”

The Standard forms part of the integrated structure for competencemanagement being offered to themaritime industry by DNV SeaSkill,the other two services being certi-fication of training courses andcertification of personnel.

Teekay Shipping is taking competence management to newheights, establishing as part of its business strategy its owncompetency management program called SCOPE. Det NorskeVeritas recently issued a statement of compliance to Teekayfor its system – the world’s first competence managementsystem certificate.

Teekay has made significant strides intothe global shipping industry in the pastdecade. Whilst undergoing this periodof rapid expansion, Teekay has beenable to cultivate a personal approachto its customers. This strategy is openingnew doors and further increasing themarket potential for the company andits investors.

“Teekay is intent on expanding its activit-ies and the development of a formalcompetency management system is alogical step in our drive to reach this goaland further our continuous improvementand quality service to customers,” saysGraham Westgarth, president of TeekayMarine Services.

A listed company on the New YorkStock Exchange, Teekay moved its headoffice from Long Beach, California toVancouver in 1991. Today, the companyhas a global network of 16 offices.

As a publicly-listed company, Teekayhas a strong desire to position itself asthe premier tanker shipping company

in the transportation industry. Thecompany’s core values are qualitythrough professionalism, reliabilityand integrity; responsible safety andenvironment practices; responsivenessand creativity to customer’s needs; loy-alty to employees; competitive and en-trepreneurial spirit; and continuousself-improvement. Says Westgarth, “Qualityof organisations and processes will bemore and more visible going forward.It is now a highly regulated industy, withgreater demands. Certain standards ofoperation are customer driven, there-fore, operation strategies need to sup-port our business objectives.”

Professionalism at SeaFor the last two years, Teekay has beendeveloping its own competency man-agement program which it calls SCOPE(Seafarer Competence for OperationalExcellence). According to John Adams,head of maritime human resourses,based in Glascow, “It’s our people whohelp us to achieve world class stan-dards in safety and operations. Teekaydeveloped SCOPE to establish the


highest standards of professionalism atsea. The program supports our philos-ophy of continuing professional devel-opment.”

The program goes well beyond legislativerequirements for certificates of compe-tency and includes Teekay Competencies;Management/Leadership BehaviourCompetencies; Overall Knowledge andUnderstanding; Aptitude; Experience;and Attitude and Motivation.

Explaining the incentive for TeekayShipping to be certified, Kevin Hewlett,director, seafarer competence & careerdevelopment, says, “SCOPE allows us tosupport our staff in their individual devel-opment and in their contributions to ouroverall success.”

The training administrator and computer-based training modules have been pro-vided by Norway-based Seagull. Hewlettexplains, “Working together, Teekay andSeagull have developed a new administra-tive system that will support the adminis-

trative requirements of the program. Thesystem has the capability to handle avery large range and number of competen-cies and training requirements for all ranks– and there are approximateley 30 Teekayspecific competencies within each rank.In addition, onboard computer-basedtraining is used extensively.”

Code of PracticeCommenting on DNV’s competencemanagement system, Hewlett says, “Wediscovered that Teekay and DNV wereboth separately developing �

As part of its commitment to becoming the premier tanker shipping company, TeekayShipping is continuously strengthening itsbest practices


Graham Westgarth is spearheading Teekay’sdrive to strengthen its working practices

competence management concepts. DNV per-ceived an industry need to compile a Code ofPractice, which they have done through theirDNV SeaSkill unit. We saw this as being verybeneficial, as it brought together two sides ofthe shipping industry – the assessor and theoperator. The first stage of the audit was re-cently carried out in Teekay’s Glasgow office.The next stage of the certification process in-cludes the audit of the entire Teekay Shippingfleet.”

Business is going well for Teekay. A good foun-dation for the business was created by the com-pany’s success in the early 1980s. Over the pastfive years, the company has gone from beingan owner operating 43 ships to an organisationnow operating over 100 ships and managinganother 20 or so. In this process, the companyhas acquired and merged with other shippingcompanies and taken them into the Teekayfold.

Teekay has now expanded into the LNG sector,as well as having already established a signifi-cant presence in the shuttle tanker market.The company is still focused on building itstanker business further, with a blend of fixed-rate and spot tanker segments.

Investing in ships and peopleComments Westgarth: “At Teekay, we are proudof our achievements in recent years, but we arecontinually striving to improve. With our on-going investment in maintaining a large, mod-ern, high-quality tanker fleet, the equipmentside is well in hand. We’ve been active regard-

ing personnel initiatives. The operational pro-cedures area is also important to us and wehave, over the past few years, strengthened ourbest practices through several initiatives, includ-ing the SCOPE system, shipboard training andrefined ship safety-performance measures.

As one of the worlds leading shipping companies,Teekay has gained a reputation of having a betterknowledge of the shipping business than manyothers. This has placed greater demands onthe company, but has also given Teekay a com-petitive edge.

Westgarth describes the competition as tough,but emphasises that Teekay is committed tomaintaining its market position and has adefined strategy to meet its customers require-ments, and to assist them wherever possible.

“Teekay views the increased emphasis on envi-ronmental protection, personnel safety andimproved operational practices in the ship-ping industry as an opportunity to continuallyimprove the overall integrity of its operations.Ultimately, we also believe that our customer-oriented approach will differentiate us fromour competitors,” he says.

“This approach is being made easier throughour work with DNV,” concludes Westgarth,“and based on our experience so far, we’reconfident that the competence system workwith DNV will help us achieve our goal of be-coming the premier tanker shipping companywhile continuing to provide our customerswith the best possible services.”

Stuart D. Brewer


Tsing Tao Brewery:

A taste of the worldTsing Tao has noticed how markets overseas havedeveloped a taste for its product and is eager toquench this thirst by growing its export capabilities. �

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Tsing Tao beer is by far the most famous beerin China and is probably the only Chinese beerwith a strong international brand. As the com-pany has proved through 100 years of growth,it takes more than a popular product and greattaste to succeed. Consistent, hard and systematicwork with all aspects of the operations formsthe foundation for a strong brand both inChina and abroad.

The Tsing Tao group started off with an ISO9001 certificate for its management systems in1995. Soon it expanded the scope both interms of number of factories and branches tobe certified and in terms of going for both envi-ronmental and safety management systems certi-fication.

“By integrating all these standards, Tsing Taohas been able to use them more efficiently inthe systematic work to improve the operationson all levels,” says Xiang Hong Qiao, director ofthe Management Enhancement Department. “Ithas been a gradual process. Of course we didpuruse comprehensive quality improvementwork before adopting the ISO standards in1995, but by using one standard, we could startstreamlining and standardising all our operat-ing procedures and practises. And through theintegrated certification scheme, this process hasbeen developed further.”

Continuous improvement“When we first started with certification, the focuswas very much on the non-conformities,” saysQiao. “At first, our employees feared thiswould only create a potential for blame andmore work. But soon we all experienced thatthis had nothing to do with blame, but improv-ing our processes. And the way visible improve-ments have come about, it demonstrates thatcertification helps everyone in the company dotheir job better, rather than point the finger atthe person who doesn’t.”

“By adapting the ISO 9001:2000 standard,service became one of the things we concen-trated on in our improvement work. And inthe period from 2001 to 2003, our customer

The Tsing Tao brand is sold in more than 40 countriesworldwide and accounts for more than 80 percentof China’s total beer exports. In fact, Tsing Tao is thenumber-one branded consumer product exportedfrom China.

Tsing Tao beer was the first Chinese limitedcompany to be listed in overseas stock markets,and the international aspects of the companyhas been present throughout its history. Qualityassurance has been an integrated part of TsingTao’s growth.


Jin Zhi Guo, CEO of the Tsing Tao BreweryCompany is looking to further expand its international business.

satisfaction score increased by 11 points, from71 per cent to 82 per cent as a direct conse-quence,” she explains.

“We have been very satisfied by the work ofDNV auditors. So much that we want morefrom DNV. We want the DNV auditors to contin-ually improve their competence so that the certi-fication process itself is continually improved.And we would like to see DNV using its inter-national network and experience to facilitateseminars and conferences where big compa-nies can come together and share experiencesand best practices.

Beyond the ISO standardsHua Li is technical director at Tsing Tao:“There were tremendous changes in termsof the way we worked. The transition to the2000 version of ISO 9001 provided a differentapproach to our practises. And the DNV audi-tors also brought with them a sense of fresh air.We appreciate the DNV auditors’ competenceand broad insight into management skills andbest practices. This will become increasinglyimportant as we want to move beyond the ISOstandards.”

At present, the company’s primary objective isto increase export to Taiwan, and to achievethis goal, Tsing Tao beer has setup a factory inTaiwan. Then Tsing Tao beer will gradually ex-pand export to other parts of Asia while main-taining its established market shares in Europeand the US.

“The escalating competitiveness in the interna-tional markets is matched by the increasing in-terest shown by non-Chinese companies forTsing Tao’s domestic market. This means thatcontinuous improvement at all levels will play avital role in our success. And certification thatcan push a company beyond mere compliancewith standards is what can give Tsing Tao theedge,” concludes Madame Qiao.

Kristian Lindøe

An internet kiosk at the Tsing Tao museum.

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DNV benefits from growth

Ragnar Hansen is DNV’s recently appointedregional manager for South East Asia, and formerhead of DNV’s marketing division. He empha-sises, “Things are looking good. Today we havejust one-third of our business in Scandinaviaand the rest of it is from outside Scandinavia.In the past six months we have gained about 40percent of all classification business for new-buildings in South Korea, and 20 percent inChina.

”DNV has a network of 70 offices in 25 coun-tries in Asia, and supplies a full range of tech-nical and consultancy-related services supportedby resource centres in Pusan, Shanghai andthe Asia Pacific base in Singapore, which hasbeen established for more than 38 years.

“Asia leads the world in newbuildings witharound 90 percent of the market; DNV gaineda market share of 17 percent of all newbuild-ings ordered in 2003. Recently, new orders and

Rapid expansion in Asia’s shipbuilding and shippingactivities, springing from sustained economic growth,is offering new opportunities for DNV

The focal point of some 400 shipping lines, Singapore is the world’s busiest port in terms of shipping tonnage.

Photo: Singapore Maritime Port Authority

class transfers have helped to increase the DNVfleet to over 100 million grt – an all time high,”says Hansen.

DNV has kept a close eye on the development ofAsia Pacific’s shipping industry. It’s been a fastchanging, fast developing industry and still is, butwhat was relevant 10 years ago in Singapore isn’t aspertinent today.

Maritime cluster“Singapore will undoubtably retain its world-leading position as a major transhipment centreand also continue its role as a shipbuilding andrepair centre. However, Singapore will probablyenhance its position as a ‘maritime cluster’ with in-creased activities in shipowning, ship manage-ment, ship finance, legal and other marine-relatedservices,” states Hansen.

The majority of DNV’s work in Singapore isaimed at supporting shipowners with class mattersrelating to day-to-day operation of their vessels.However, to complement Singapore’s efforts toenhance its capabilities DNV will continue to offertraining courses. Says Hansen, “The need fortraining is tremendous; and like Europe, thedemand by Asian shipowners for skilled shoreand sea-based personnel is growing significantlyevery year.”

Value-added servicesAlong with its class and training services, theSingapore office is offering its customers a wideand expanding range of value-added services fromrisk management to the testing of bunker fuel.

Nick Roper, head of the Maritime Service Centrecomments: “In response to changing marketconditions, we are actively developing both newand existing services from life-cycle risk manage-ment and integrity management to safety andenvironmental consultancy and R&D projects.DNV has recently established a Maritime Solutionsconsultancy office in Singapore to offer these serv-ices locally. We believe that the ability to swift-ly respond to change, and a committed ap-proach to further innovation and improvement,will help position us for the future.”

Det Norske Veritas Petroleum Services (DNVPS) isthe largest tester of bunker quality levels in theworld – ensuring that contaminated fuel is avoidedand maintenance costs reduced. “DNV hasstrengthened its position in fuel quality testings,with a 75 percent share of the world market,” saysPer Holmvang, the newly appointed managingdirector of DNVPS. “Declining fuel quality hasover the past years led to a range of engine fail-ures, creating dangerous situations. As more con-taminants and wastes find their way into thebunker delivery chain, a continual quality surveil-lance is essential to help ship operators verify ifthe fuels delivered to their vessels are safe foruse.”

DNV and shipowners both know that detentionscost time and money. DNV is committed to support-ing owners in quality ship operation while authori-ties increase their efforts to crack down on substan-dard ships and owners. Recognising this, DNVdeleted 29 vessels from class last year, and has lowdetention rates in the three principal Port StateControl regions.“

“The fact that DNV has one of the lowest deten-tion records reflects our enhanced efforts. It alsodemonstrates that we have customers who valuequality highly, and that our follow-ups work,” saysHansen and concludes, “Now there is a new chal-lenge on the horizon, with shifting trade patternsin South East Asia. We have to follow the direc-tion of the trade, and we will expand our net-work and services to be close to our customers.”

Stuart D.Brewer


within Asia“Asia is an enormous marketand, for practical reasons, it is important to have aprominent presence with agood mix of competence,” says Ragnar Hansen, here with Nick Roper (standing).


NEWS �

First-ever series of VLCCs in China completed

Iran Delvar, the first Very Large Crude Carrier (VLCC) in a series of fivefor NITC, all built to DNV class.

China’s first-ever series of Very Large Crude Carriers (VLCC) have all been built to DNV class. The last in the series of five ships was recently delivered to owner NITC.

The largest shipyard in northern China, theDalian New Shipbuilding Heavy IndustriesCo Ltd (DNS), delivered in June the IranDarab. This was the final Very Large CrudeCarrier (VLCC) in a series of five to Iranianshipowner the National Iranian TankerCompany (NITC). The DNV-classed vesselsare the first VLCCs ever to be built by aChinese shipyard.

The first 300000 dead weight tonnes VLCC,Iran Delvar, was delivered in 2002 after 24months of construction, while the last vessel inthe series took only 16 months to buildfrom steel cutting to delivery.

Close cooperationThe cooperation between DNS, NITC andDNV was close-knit throughout the project,with several divisions within the DNV grouphaving contributed to the project’s overallsuccess.

Areas of influence included vibration andnoise evaluation, shaft alignment calcula-tions, and ballast water management plansfor all five vessels in the series.

DNV continues work at DalianNITC expressed its gratitude to DNV for itssupport with the following statement:“NITC would like to congratulate andthank all those concerned for their trust,contribution and cooperation during theproject and we look forward to its continua-tion in the future.”

NITC is planning an extensive new build-ing program including LNG ships andVLCC’s while DNV work at DNS continueswith two dual classed VLCC for the ChinaShipping Group, one of the main shippingcompanies in China.

Polish McDonald´s ISO 14001 certified

Wall Street Instituteearns quality certificate

The Wall Street InstituteSchool of English is one ofthe few English languageinstruction schools to becertified to ISO 9001:2000.

The certificate covers design,development, implementationand quality control of teachingmethods for training and learn-ing English for the Barcelonafacilities. “This recognition willset us apart from our competi-tors,” says Tim Daniels, presidentof the Wall Street Institute.

“The achievement of ISO 9001: 2000 certificationreflects our continuous effort to provide our stu-dents with superior product quality and English lan-guage instruction that is first rate. We are proud tohave achieved this formal recognition.”

Wall Street Institute School was established in 1972to help people wanting to learn English for profes-sional and personal reasons. Today the Wall StreetInstitute School of English is an international insti-tution with over 350 centers in 26 countries. Over140,000 students learn and improve their English atthe various locations each year. It has headquartersboth in Baltimore, the United States, and in Barcelona,Spain.

DNV Poland has issued a corporate ISO 14001 certificate to the Polish McDonald´s restaurant chain.

The Polish McDonald’s chain includes180 restaurants.

“Receiving ISO 14001 certification is areward to all of us for years of hardwork in the area of environmental pro-tection,” commented Tomasz Kurpiewski,the head of the Polish McDonald’s en-vironment department as the certifi-cate was handed over.

The certificate was handed over at aformal ceremony held recently.

“This certification confirms that thePolish McDonald’s chain considersenvironmental issues to be a priority,”says Wojciech Piskorski, the area managerat DNV’s office in Katowice, Poland.

“Receiving this certificate is a greatmotivational tool to make us evenmore involved in the field of environ-mental care,” said Kurpiewski.

McDonald’s started operating inPoland in June 1992 by opening itsfirst restaurant in Warsaw. The PolishMcDonald’s chain today employs10,000 people. Almost all the raw mate-rials they use come from domestic sup-pliers.

At the ceremony, from the left,Tomasz Slupek, sales manager DNVPoland, Tomasz Kurpiewski, head ofthe Polish McDonald’s EnvironmentDepartment, Dragos Pavicevic, managing director of the PolishMcDonald’s, and Wojciech Piskorski,area manager DNV Poland


The value of extended ClassA new study of all DNV-classed vessels of6,000grt and above clearly shows the safetyvalue of additional Class Notations.

The accident rate - collisions, groundings and con-tact damage - for vessels holding the "nautical" classnotations NAUT-AW and NAUT-OC built since 1990has been half that of ships without them.

Since such events account for about half of all ma-rine accidents, this statistical difference strikinglyconfirms the value of operational aspects being cov-ered by additional class notations. Their main focushere is on the "total bridge system", taking into ac-count bridge procedures, the human operator, thetechnical system and the man/machine interface:all these play a major role in ensuring the safety of avessel at sea.

DNV's proactive approach to ship operation is itsnew guidelines for the bridge design of offshoreservice vessels, forming the class notation NAUT-OSV. Developed in partnership with Norsk Hydro,Statoil and OSV operators, the aim of the guidelinesis to optimise the design and layout of bridge equip-ment, and extent of the information to be handledby bridge personnel in different operations.

Jan Behrendt Ibsø, general manager for DNV Global Wind Energy, believesthat the wind energy market is about to become global.

First DNV certification rulesfor wind turbinesDNV issues design standard and certification regime for offshore wind turbines,comparable with Class Rules for ships.

“The newly established certification regime for offshore wind turbines is comparable toClass Rules for ships,” says Jan Behrendt Ibsø, general manager for DNV Global WindEnergy.

A supplement to existing standardsDNVs certification regime will be a supplement rather than a competitor to the alreadyexisting international standard for wind turbines, IEC. As of today there are no national orinternational standards covering offshore wind turbines.

Investments in offshore wind projects are anticipated to reach to 13 billion Euro.

Four standardsThe first design and certification standard intends to cover this gap, by including require-ments for everything below the upper part of the wind turbines (the nacelle) at sea.

The next standard, to be issued by November, will cover the blades. Thereafter there will beissued a standard for wind turbines’ electrical components, and subsequently a standardcovering the wind turbines’ gearbox.

“The wind energy market is about to become global. Today we have identified projects inFrance, the Netherlands, Belgium, Ireland, United Kingdom, Germany and Sweden. Spainis in the pipeline together with the US,” says an optimistic Jan B. Ibsø.

The main focus of the nautical class notations is on the totalbridge system, involving the streamlined integration of humanoperation, technical systems and onboard procedures


What, no dolphins?!

LAST WORD

SituationFor a number of years, legislation in many countries hasdemanded increasing corporate accountability and socialresponsibility. And while many of the responsibilitiesplaced upon company directors have not changed indecades, societal expectations have become increasinglydemanding.

ComplicationWe are more accountable than ever before. Society demandsit, the law reflects it. Today, the meaning of the phrase“Responsible care” has a different meaning than it did inthe 1980s, and society (quite rightly) has pressed for moretransparency in how companies deliver on their promisesto be socially responsible.

The days of the annual report being a narrative of pastperformance, heavily biased towards the image the com-pany wishes to portray, are coming to an end. Global scan-dals have increased the pressure and tempo for organisa-tions to present a balanced account of their activities, withmore focus on forward looking intent and viability.

The public face of organisations is being challenged.There is increasing pressure to show that which lies be-hind the mask. This trend is reflected by the lack of toler-ance for that corporate sin – “green-wash*”. Companiescan no longer hope that by simply including images ofdolphins in their corporate literature will be sufficient todemonstrate their deep-rooted concern for the environ-ment. Stakeholders are demanding facts, not pictures.

Furthermore, the demand for increased transparency anda company’s ability to justify its actions is paramount. Non-governmental organisations (NGOs) and society in gener-al are applying increasing pressure to force governments,local authorities, industry, and commerce alike to bemore transparent. These dramatic changes have createdsome complex challenges. Organisations have to be “goodcorporate citizens”. To ensure their survival, industry lead-ers have to set the standards, while communities have or-ganised in an effort to be heard, respected, and consulted.

QuestionWhat does an organisation have to develop, demonstrateand sustain, in order to be a good corporate citizen, neigh-bour, employer and provider?

AnswerOrganisations have to accept and understand that societyhas expectations of the business community and that thebusiness community has a responsibility to meet thoseexpectations. Even if that truth is painful, industry mustbe accountable for its activities and the leaders of theindustry have to take personal responsibility for what theydo (or don’t do).

This means that industry has to be more transparent thanit has ever been before. Transparent reporting and opera-tional delivery (the way we do business) is the “norm”, sothat it can be assessed, understood and, if required,challenged.

Leaders have to be visible and active. All personnel inpositions of influence must accept their associated accounta-bility, whether they are executives, non-executives or haveany managerial authority within any part of the organisa-tion.

Leaders have to be responsive to new challenges, embracechange and be available to their stakeholders. This all de-mands flexibility. What works today may not work tomorrow.Old norms will be challenged, new norms will be tempo-rary, and an organisation’s ability to respond to changingdemands will be constantly placed under pressure.

How ready is industry today to open its doors, books andhearts to public scrutiny? This is a key question all organ-isations must face, and to do so effectively requires trans-parency. Sufficient corporate transparency will demon-strate a company’s future viability, show the impact it hason all stakeholders and prove that the risks it faces, andthe risks it poses to others, have been identified, under-stood and acceptably managed.

The question remains – how ready are you?

*Green-wash: (gren-wôsh) –washers, –washing, -washed 1) The phenome-non of socially and environmentally destructive corporations attempting topreserve and expand their markets by posing as friends of the environ-ment and leaders in the struggle to eradicate poverty. 2) Environmentalwhitewash. 3) Hogwash.

Challenging the industry´s ability and willingness to be accountable,DNV Consultants Glenn Corr and Nick Jackson take a closer lookat the discrepancy between what the annual report promisesand companies do...

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